Central bank governor Zhou Xiaochuan said the yuan is "in the process of strengthening" as China allows greater flexibility in the currency's exchange rate.

"We're steadily expanding the flexibility of our exchange rate," Zhou told reporters today in Basel, Switzerland, where he's attending a meeting of central bankers from the Group of 10 industrialized nations. "That's the policy, and I think that's quite determined."

China is under pressure to let the yuan appreciate to help ease trade imbalances with countries such as the U.S.

A stronger yuan will make Chinese goods more expensive abroad relative to its major trading partners and help narrow the U.S. trade deficit.

The yuan last week reached its highest against the dollar since China ended its peg to the U.S. currency in July 2005, after the central bank on Aug. 9 said it would use exchange-rate policy to help cool export-led economic growth.

The yuan has gained 2 percent against the dollar since the People's Bank of China ended the currency's peg to the dollar on July 21, 2005.

The currency was little changed at 7.9485 against the dollar as of 5 p.m. in Shanghai, on Friday, Sept. 8, according to Bloomberg data. It reached 7.9334 on Sept. 5.

Economic growth in China, the world's fourth-largest economy, accelerated to 11.3 percent in the second quarter from a year ago, compared with 10.2 percent for the whole of 2005.

China will be "more proactive and progressive" in letting the market set the currency's value, Finance Minister Jin Renqing said yesterday at a meeting of 21 Asia-Pacific finance ministers in the Vietnamese capital of Hanoi.

"We have given the market a more important role in deciding the exchange-rate level and the market is playing a more important role already," Jin said.