The People's Bank of China on Friday set the central parity rate, the centre point of the currency's allowed trading band, at 6.7896 to the dollar, 0.3 per cent stronger than Thursday's 6.8100.
The move marks the strongest level since China freed the currency from an 11-year-old peg in July 2005 and moved to a tightly managed floating exchange rate.
Ahead of the G20 meeting, China has been under intense pressure to embrace currency reform as part of efforts to enhance a global economic recovery.
US President Barack Obama said Thursday it was too early to determine the impact of China's limited currency reform although he viewed the move as "positive".
Policymakers pledged last weekend to let the yuan trade more freely against the dollar but ruled out dramatic moves in the currency or a one-off appreciation.
Experts say the yuan is undervalued against the dollar by up to 40 per cent.
The central bank said the yuan would remain "basically stable".
US lawmakers have threatened to press ahead with legislation they said would treat "currency manipulation" as an illegal subsidy and enable US authorities to impose tariffs on Chinese goods.