The Chinese currency on Monday strengthened against the U.S. dollar to its highest level since August last year.

The central parity rate of the Chinese currency renminbi, or the yuan, strengthened 226 basis points to 6.6353 against the U.S. dollar Monday, according to the China Foreign Exchange Trade System.

The dollar index fell 0.25 percent against a basket of six major currencies to 92.499 on Monday, adding to Friday's losses.

At the annual Economic Policy Symposium on Friday, U.S. Federal Reserve Chair Janet Yellen offered no clues about the future of the country's monetary policy. Expectations for tighter monetary policy in the U.S. have been dampened recently by soft inflation data.

Meanwhile, the yuan is also supported by a slew of upbeat economic data, which pointed to recent restructuring achievements and provided fresh signs of stabilization for the Chinese economy.

China's economy expanded 6.9 percent during H1, with consumption and services, together with new innovation-driven economic sectors, playing bigger roles in the economy.

Foreign exchange reserves rose for a sixth month in July to hit 3.1 trillion U.S. dollars, increasing 23.9 billion U.S. dollars from a month earlier, according to the central bank.

It is the first time since June 2014 that reserves have expanded for six straight months.

With the country's fundamentals improving, the yuan is likely to advance more against the U.S. dollar, especially when considering that some major currencies like the Euro and Australian dollar have moved up 10 percent this year, said Lukman Otunuga, a research analyst at ForexTime, a global trading platform.

"I think the momentum of the yuan is sending a clear signal that the currency will strengthen further over the coming months, and there is room for the yuan to advance another 2 to 3 percent before the end of 2017," said Otunuga.

In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.

The central parity rate of the yuan against the U.S. dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.