Which Street Fighter game first introduced the 'Parry' mechanic?

Street Fighter III: New Generation was the first Street Fighter game to introduce the parry mechanic.

Released in arcades in 1997, the game replaced the aerial-guard system used in Street Fighter Alpha with parrying. To perform a parry, the defender moves toward the incoming attack at the moment it connects. A successful parry avoids damage and creates an opening for a counterattack.

Parrying became the defining defensive system of Street Fighter III, although the mechanic was refined in later entries. Street Fighter III: 2nd Impact and Street Fighter III: 3rd Strike adjusted the timing, balance, and practical uses of parries, which is why many players associate the mechanic most strongly with 3rd Strike.

The answer refers specifically to the Street Fighter series. Other fighting games had comparable deflection systems earlier, so New Generation should not be described as the first fighting game ever to use parrying.