BEIJING — China's yuan strengthened beyond 7.4 to the dollar for the first time since a fixed exchange rate was scrapped in 2005, as the central bank allowed faster gains before a visit by European officials next week.

The currency's appreciation "should accelerate," European Central Bank President Jean-Claude Trichet, who arrives in Beijing on Tuesday for two days of talks, said yesterday. Xie Fuzhan, a member of the People's Bank of China's monetary policy committee, said increased yuan flexibility is "essential" to make China's economy more stable.

While the yuan has risen about 5 percent against the dollar this year, it has weakened by almost 7 percent versus the euro, raising the cost of European goods. Growth in China's exports to Europe and the U.S. have flooded its economy with cash, helping push the inflation rate to a decade high.

The Europeans will "highlight the issues they see driving such a huge trade deficit," said Sean Callow, senior currency strategist at Westpac Banking Corp. in Singapore. "There is validity to lots of their concerns, which ultimately add to the argument for sustained and substantial yuan appreciation."