China allowed its currency to strengthen against the U.S. dollar on Tuesday amid Washington's escalating demands that Beijing speed up the appreciation of the yuan.
According to the central People's Bank of China, the yuan's central parity rate was set at 6.7051 against the greenback, up from 6.7098 the previous session. A week earlier, the bank set the official rate at a record high of 6.6997.
The U.S. is arguing China artificially lowers the value of the yuan, giving its exporters an unfair advantage in overseas markets. During the financial crisis, the yuan had been pegged at around 6.83 to the dollar.
In May, China's central bank said that it would make the yuan exchange rate more flexible, signalling it is ready to change its two-year-old peg to the dollar.
U.S. politicians, however, have recently become more critical of China for not letting its currency fluctuate further.
U.S. President Barack Obama on Monday said at a town hall meeting that Beijing has not done enough to raise the value of its currency. The yuan "is valued lower than market conditions would say it should be," he said, adding the U.S. is going to "enforce trade laws much more effectively" to make sure trade is good for American businesses.
U.S. lawmakers are scheduled to vote Wednesday on legislation that would allow U.S. companies to petition for higher duties on imports from China to compensate for the effects of a weak currency.
China has been continuously resisting such arguments, saying it will not bow to pressure from the outside world to revalue its currency.
China's Premier Wen Jiabao indicated last week the yuan will not rise sharply.
"Conditions do not exist for the sharp appreciation of the yuan," Wen said at a meeting with members from the U.S. business and academic circles in New York.
Meanwhile, Japan has recently faced some criticism after allegedly intervening this month in the currency markets by weakening the yen for the first time in six years in order to boost the country's exporters.