China's central bank on Thursday said it would increase the "floating flexibility" of yuan, also known as renminbi or RMB, while keeping it basically stable at a reasonable equilibrium.
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The People's Bank of China reiterated in a report after its quarterly monetary policy meeting that China will continue to improve its exchange rate mechanism.
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China should continue to implement a prudent monetary policy, it said.
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The yuan strengthened to 8.0250 against the U.S. dollar on Monday, the highest level since its July 21 revaluation, but weakened marginally to 8.0296 on Friday.
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The Chinese currency has gained more than 3 percent since July last year.
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U.S. Senators Charles Schumer and Lindsey Graham are in China to discuss growing concerns in the U.S. Congress about China's trade practices, currency policy and intellectual property rights.
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The visit comes as a March 31st deadline nears for the Senate to vote on a bill written by Schumer and Graham that would impose a 27.5 percent tariff on Chinese goods. The bill is designed to counter what the Senators call China's artificial currency exchange rates that benefit Chinese manufacturers at the expense of American producers.
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In response to a journalist's question on whether China would revalue its currency, Chinese Premier Wen Jiabao said a week ago that the "RMB now boasts the room and capacity to float up or down on its own in line with the current mechanism and market changes."
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(Xinhua News Agency March 24, 2006)