Spot yuan opened at 6.1950 per dollar and strengthened to 6.1931 before settling back to 6.1960 by midday, to stand 0.15 percent stronger than Wednesday's close.
The People's Bank of China (PBOC) set the midpoint rate at 6.1305 per dollar prior to market open, 0.06 percent firmer than the previous fix at 6.134.
Traders said the yuan's sharp rise also came after China's Premier Li Keqiang was quoted as saying that he did not want to use currency depreciation to boost the flagging exports sector during an interview with Financial Times.
The yuan's recent move suggests that as China's export engine sputters, it is avoiding the seemingly simple fix of letting its managed currency drift lower to improve competitiveness.
The risk of faster capital outflows as the economy slows, could be constraining Beijing's room for manouevre.
The dollar buying that halted the yuan's rally this morning could suggest that the market may have reached a consensus that the monetary authorities would like to see the yuan stable in a range of 6.19-6.21 per dollar in the short term.
The offshore yuan was trading at 6.1969 per dollar by midday, little different from the onshore spot rate.