Beijing — China's central bank set the yuan's reference central parity rate on Friday to its highest level against the dollar since 2005's revaluation, despite growing concerns about the economic slow-down in China and the rest of the world.

But analysts said the strong rise of the yuan could be temporary because it is a result of the recent weakening of the dollar and strengthening of the euro.

"Once the dollar weakening stops, the yuan could weaken again," said Liu Dongliang, chief currency analyst at China Merchants Bank.

The People's Bank of China set the yuan's reference rate at 6.772, up more than 0.8 percent compared to the 6.83 it was two weeks ago when the authorities announced the yuan would be made more flexible.

In market trading, the yuan rose as far as 6.7808 against the dollar on Thursday, a whisker from Wednesday's peak of 6.7801, the highest since its July 2005 revaluation.

Yuan forwards completed a fourth weekly gain as the euro rallied against the dollar following Spain's successful sale of bonds at auction on Thursday.

Twelve-month non-deliverable forwards jumped 0.2 percent to 6.6690 per dollar as of 5:37 pm in Hong Kong and strengthened 0.14 percent during the week. The performance reflects bets that the yuan will appreciate 1.5 percent in one year.

"The rise of the yuan against the dollar is not surprising," said Liu.

He explained that it was a "technical" appreciation because of the weakening dollar and rising euro.

"It's not strong enough to invite the central bank's intervention."