China did not lower the yuan artificially to pursue its own interests, the country's foreign exchange chief Guo Shuqing said Monday in Beijing.

The demand on yuan appreciation implies the accusation that China used a "fixed" exchange rate to benefit itself, which is "completely a rumor," said Guo, director of the State Administration of Foreign Exchange.

Some developed countries including the United States contend that China has dominated overseas market with its cheap exports with the support of a low yuan, but Guo said the yuan fluctuates simultaneously with the US dollar within the same band as it is basically stable against the dollar.

Following the Asian financial crisis in 1997, currencies of most of China's neighboring countries depreciated, but a strong dollar had pushed higher the renminbi exchange rate on average from 1997 to 2002. Only after 2002 did the dollar start to weaken -- together with the yuan, Guo pointed out.

The US Treasury Department had also said on a number of occasions that China did not manipulate its currency, he said.

In an interview with Xinhua on the sidelines of the annual sessions of China's top legislature and advisory body, Guo reiterated that the yuan will be kept "basically stable" at a rational equilibrium. China now implements a managed, floating exchange rate mechanism based on market supply and demand.

Regulators have been gradually lifting restrictions on foreign exchange dealings by individuals and companies on the back of booming economic and trade activities in the country.

Guo, a member of the advisory body, the National Committee of the Chinese People's Political Consultative Conference, said the "core job" is to upgrade the exchange rate determination mechanism -- instead of simply revaluing the yuan -- while vowing to make the currency increasingly market-based.

But he said, "There is no timetable for the exchange rate reform."

"It is a complicated job and should be done step by step."

The exchange rate reform should take into full account the macro-economic climate, the bearing capacity of the financial system, performance of the financial market and impacts on regional and global economies, Guo said.

"Only on this basis can we make research into and map out scientific plans on the rate reform and carry out it at the right time," he added.

"Very importantly, state-owned commercial banks and rural credit cooperatives in China have quickened their pace of reform, while financial enterprises are sharpening their capacity of managing business risks."

Guo pointed out the renminbi could either strengthen or weaken after becoming more flexible in the long run.

Source: Xinhua