China's currency, the yuan, will continue its ascent in value against the US dollar, and market watchers predict it won't be many days before one dollar trades less than 7 yuan, a new milestone.

The People's Bank of China, the central bank, set the central parity exchange rate at 7.0512 yuan against the greenback on Thursday, rising 136 basic points from Wednesday. The yuan has gained 3.3 percent in value since the beginning of 2008.

The majority of Chinese economists as well as policy-makers believe a strong yuan will help reduce the country's massive trade surplus, mop up excessive liquidity on the market, and curb domestic inflation, which rose to a 11-year high of 8.7 percent in February.

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