THE central bank Thursday set the yuan at 6.992 against the U.S. dollar, the first time the currency has broken through 7.000 since a peg with the U.S. unit was scrapped nearly three years ago.

The yuan has now risen about 18 percent against the dollar since July 2005, when it was cut loose from a peg to the greenback.

While this underlined China’s commitment to major yuan appreciation against the dollar this year as the government fights inflation, the yuan may not climb dramatically in coming days and weeks, especially if the central bank decides it wants to deter speculators, traders said.

The speed has picked up recently, with the yuan gaining about 4 percent against the dollar since the beginning of this year.

“Although 7.000 is psychologically important, we don’t see the rise above that level as particularly important in terms of what will happen in the near term,” said a dealer at a European bank in Shanghai.

“It won’t change the central bank’s measured way of allowing the yuan to rise over the long term.”

But a stronger currency is not popular among domestic exporters, many of which have come under intense pressure as they have lost competitiveness in recent months.

“It’s negative for small and medium-sized exporters, like factory owners who worry about higher operating costs and lower profits,” said Sun Lijian, an economist at Shanghai’s Fudan University. (SD-Agencies)