China will reform its foreign exchange system in an orderly way and will not bend to pressure from the US to float the yuan, said Zhou Xiaochuan, governor of the People's Bank of China yesterday.

China has its "own principles" to carry out its exchange rate reform and the current rate is appropriate, Zhou told reporters at the sideline of the annual session of National People's Congress (NPC) on Saturday.

Zhou Xiaochuan, governor of the People's Bank of China [newsphoto/file]
In response to the recent fall of the yuan on the international market, Zhou said it was mainly determined by the supply and demand force in the market. He said that the dollar was a little stronger against the euro and the yen, thus affecting the yuan.

Zhou said that although the main theme of the World Bank and International Monetary Fund meeting in April is about the global economic disparity, discussion with the US on bilateral issues would be also unavoidable, without elaborating whether currency reform will be involved.

US Treasury Secretary John Snow again urged China to float its exchange rate on Friday. There are reports that he is under mounting pressure from the US lawmakers to label China a currency manipulator in a report due in April. US President George W. Bush also said that he would adopt further movement to press China to appreciate its currency soon.

The yuan has floated less than one per cent since the central government revalued it and discarded its peg on the greenback on July 21 last year.

Premier Wen Jiabao said in this year's government report that China will improve the system of managed floating foreign currency exchange rates and keep the Renminbi exchange rate basically stable at an appropriate and balanced level.

Source: CCPIT TEX