The comments made by a spokesman for the People's Bank of China came a day after policymakers pledged to make the currency more flexible amid growing international pressure on Beijing for a stronger yuan.

They also came ahead of the G20 summit in Toronto next weekend where Beijing's controversial exchange rate policy -- which has effectively frozen the yuan against the dollar for the past two years -- will be on the agenda.

The central bank spokesman said authorities had to maintain control over "exchange rate fluctuations," signalling that policymakers would not let the currency appreciate quickly, as many critics had hoped.

The "basic stability" of the yuan would be maintained, the spokesman told the official Xinhua news agency, according to a transcript of the interview posted on the central bank's website.

"The management and adjustment of the RMB (yuan) exchange rate needs to be done in a gradual way," he said.

Many analysts had expected the central bank to announce a one-off revaluation in the yuan and a widening of the trading band to appease critics of the exchange rate policy, which it has not done.

The spokesman's comments came after the central bank said Saturday it would make its yuan exchange rate more flexible, an indication, analysts said, that Beijing was ready to scrap the dollar peg and allow the currency to rise.

However, the bank said there were no grounds for "large swings" in the currency.

"China's central bank has decided to further promote the reform of the RMB exchange rate mechanism, and strengthen the flexibility of the RMB exchange rate," the central bank said on its website.

The currency issue has been a constant irritant in relations between the United States and China, with US lawmakers charging that Beijing deliberately undervalues the yuan to give its exports an unfair trade advantage.

Beijing has effectively pegged the yuan at about 6.8 to the dollar since mid-2008 to prop up exporters during the financial crisis and prevent massive job losses in the manufacturing sector, which employs millions of people.

The currency has been allowed to move within a 0.5 percent range on either side of the peg and the central bank said Saturday it will maintain this trading band.

The statements issued by the central bank may be an attempt by Beijing to deflect criticism of its exchange rate policy at the June 26-27 summit of world powers including the United States -- a vocal critic.

China's President Hu Jintao will pay a state visit to Canada next week ahead of the summit and the government said last week he was not open to debate about currency rates.

Facing election-year pressure, US lawmakers from both sides of the political aisle have vowed to launch legislative action within weeks to punish China over its currency policy.

In a letter to Commerce Secretary Gary Locke this month, they sought a ruling on whether Beijing's currency policy provided an "unfair subsidy for Chinese paper products that should be remedied through trade measures."

In Tokyo, Japan's Finance Minister Yoshihiko Noda welcomed China's announcement on its exchange rate.

"We hope this will contribute to the stability and balanced growth of the Chinese and Asian economies, and eventually of the global economy," Noda said.

In Sydney, Australian Treasurer Wayne Swan also welcomed China's decision, telling reporters that "exchange rate flexibility is one important part of the global reform agenda."

del.icio.us	Digg	Reddit
YahooMyWeb	Google	Facebook

Memory Foam Mattress Review

SPACE MEDIA NETWORK PROMOTIONS Solar Energy Solutions Tempur-Pedic Mattress Comparison ... Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News