Dec. 20 (Bloomberg) -- The yuan rose for a third day against the dollar as the U.S. Treasury refrained from naming China a currency manipulator in its semi-annual review of exchange rates.

Treasury Secretary Henry Paulson reiterated yesterday that China should let the yuan appreciate at a quicker pace and said gains since the currency's link to the dollar was scrapped in 2005 are ``not fast enough.'' Paulson was in China last week as part of talks to urge the nation to increase flexibility in the yuan to offset lopsided trade and help slow China's economy.

``It's good China wasn't labeled a manipulator,'' said Liang Futao, an analyst at Shenyin Wanguo Research and Consulting Co. in Shanghai. ``The government may keep allowing the yuan to rise next year to help reduce import prices and ease inflation.''

The yuan advanced 0.1 percent to 7.3694 per dollar as of the 5:30 p.m. close in Shanghai, from 7.3768 yesterday, according to the China Foreign Exchange Trade System. The yuan has gained 6 percent this year, adding to the 3.4 percent pace in 2006.

China should ``significantly'' accelerate the appreciation of the yuan to ``minimize the risks that are being created for China itself as well as the world economy,'' according to the Treasury report released yesterday, in which China and 22 other countries or regions weren't designated as currency manipulators.

Since the dollar peg was abandoned in July 2005, the yuan has risen 12 percent and is managed against a basket of currencies including the yen, South Korean won and British pound.

``The recent modest acceleration in the pace of renminbi appreciation is welcome, though insufficient,'' the Treasury report said. The yuan is a denomination of the renminbi.

China Visit

The report was released after Paulson's visit to China last week, when he pushed for faster gains in the yuan when meeting Chinese Vice Premier Wu Yi in the third round of the so-called Strategic Economic Dialogue. The talks ended with little consensus on the yuan.

``The U.S. should know that to name any country as a currency manipulator does no good to its own benefit as well,'' said Guo Zhaoyang, a foreign-exchange strategist at China Everbright Bank Co. in Guangzhou.

China's Commerce Minister Chen Deming said the currency's 6 percent advance this year ``fits China's economic needs.'' He also said China isn't opposed to faster yuan gains, only those that are excessive.

Inflation at 6.9 percent was the most in 11 years last month and China's gross domestic product growth is the best among major economies. Export earnings are flooding the economy with cash, making it difficult for the central bank to slow lending and investment even after raising interest rates and banks' reserve requirements.

Debt Sales

Forward contracts in the yuan show traders are betting on an 8.4 percent gain in the currency to 6.7965 in the next 12 months. The median estimate of 28 analysts surveyed by Bloomberg News is for a 6.9 rate by the end of 2008.

China Development Bank, the nation's biggest bond seller after the finance ministry, will sell a total of 51 billion yuan ($6.9 billion) of debt maturing in five and seven years on Dec. 24 in three auctions.

The 31 billion yuan of five-year notes will carry a coupon 0.75 percentage point more than the benchmark one-year deposit rate. The seven-year debt will be sold with a 4.94 percent coupon, according to a statement posted on the Chinabond Web site, the nation's largest clearing house.

``Some institutions are competing to sell debt as there's lots of cash in the market before the year-end,'' said Cao Min, an investment portfolio manager with New China Life Insurance Co. in Beijing. ``No more new stock issues are expected this year, so investors may want to hold some debt.''

The benchmark interbank seven-day repo fixing fell for a fifth day, to 2.35 percent, compared with a more than one-month high of 4.8 percent reached on Dec. 13, according to the National Interbank Funding Center.

The Shanghai interbank offered rate, or Shibor, for one- month funding declined 32 basis points to 3.71 percent. A basis point is 0.01 percentage point.

The yield on the treasury bonds due in November 2014 was at 4.33 percent, according to the China Interbank Bond Market. The price of the 4.35 percent security was little changed at 100.11 per 100 yuan face amount.

To contact the reporters on this story: Belinda Cao in Beijing at lcao4@bloomberg.net.

Last Updated: December 20, 2007 04:55 EST