SHANGHAI--China's yuan rose sharply against the U.S. dollar late Friday and hit a fresh high intraday as it tracked overnight euro gains against the greenback. The dollar was at CNY6.2161 around 0830 GMT on the over-the-counter market. That was lower than Thursday's close of CNY6.2244. It traded in a range of CNY6.2126 to CNY6.2188. The yuan hit 6.2126 intraday--its strongest since the introduction of the modern currency-trading system in 1994. The People's Bank of China set the dollar/yuan central parity rate at 6.2712, lower than Thursday's 6.2793. The euro's strength against the dollar saw it end Thursday at $1.3272--up 1.5% from $1.3065 late Wednesday or its largest single-day percentage gain against the dollar in four months. The euro was at $1.3261 at around 0900 GMT. Traders expect more near-term upside for the yuan after data showed China's inflation picked up in December. But they added the currency's rising pace will be controlled. China's consumer price index rose 2.5% on year in December--quicker than a 2.0% on-year rise in November. The rise in the important inflation gauge was higher than the median 2.4% gain forecast by 16 economists in a Dow Jones Newswires survey. It rose 0.8% from November. "Today's trading isn't very active despite people's heightened confidence in the yuan as the central bank still capped the yuan's gains via big Chinese banks' dollar buying," said a Shanghai-based trader with a foreign bank. The yuan has risen 0.2% against the dollar since the start of 2013. Offshore, one-year dollar/yuan nondeliverable forward contracts rose to 6.2750/6.2790 from 6.2725/6.2760 late Thursday on profit taking, implying a 0.9% fall by the yuan over the next year. In the offshore yuan market in Hong Kong, where the Chinese currency floats freely, the dollar was at CNY6.1865, lower than CNY6.1905 late Thursday.

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