By Chen Yixin and Jacqueline Wong SHANGHAI, May 20 (Reuters) - The yuan strengthened for a third day against the dollar on Friday after China set a firmer mid-point, fuelling expectations that the Chinese currency could reach another record high soon. Dealers said the yuan was strongly poised to break through resistance at 6.49 in the near term as the yuan's downward correction was expected to end. "The yuan's recent correction may be finished and expectations of a weak dollar may also boost further yuan gains," said a dealer at a Chinese bank in Shanghai. "The whole-year target should be achieved," Dealers said the yuan had potential to rise 5-6 percent this year as China needs to use the yuan's exchange rate to help fight consumer inflation, which in April eased a touch to 5.3 percent from a 32-month high in March of 5.4 percent. "The yuan could rise for a while, then pull back for while, but it will generally trade upwards," said a dealer at a Chinese bank in Shenzhen. Spot yuan ended at 6.4926 versus the dollar compared with Thursday's 6.5039. The Chinese currency has now appreciated 5.14 percent since it was depegged from the dollar in June 2010, and 1.47 percent since the start of this year. Before trade began, the PBOC set the yuan's daily mid-point at 6.4983 against the dollar, stronger than Thursday's 6.5048. The central bank uses the mid-point to express the government's intention for the yuan's movements. Offshore, one-year non-deliverable forwards (NDFs) were bid at 6.3640, almost flat from 6.3650 at Thursday's close. Their implied yuan appreciation in a year's time inched up to 2.11 percent from 2.09 percent.

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