Senior Chinese economists believe China's current exchange rate needs to be adjusted "at an appropriate time and in an appropriate way," the Shanghai Securities News has reported.

"There is little possibility that the government will appreciate the Chinese currency renminbi, or yuan, in the first half of this year," the paper said, quoting Ha Jiming, a senior economist with the China International Financial Corporation.

The move is likely to come in the latter half this year, Ha said.

The renminbi is currently pegged to the US dollar at a stable rate of about 8.27 to 1.

"The revaluation of the yuan needs to be conducted while the economy is developing smoothly. It will be detrimental to China's neighboring countries if the Chinese government adopts the policy at a time when its overheated economy is not controlled," Ha told the Shanghai-based newspaper.

He Fan, deputy director of the International Financial Research Center with the World Economics and Politics Research Institute of the Chinese Academy of Social Sciences, disagrees, telling the paper he believed the revaluation could come at any time.

"It will be better to take the action earlier, as there is great pressure on China's currency policy due to the country's huge reserve of forex, which exceeded 609.9 billion US dollars by the end of 2004," He said.

Ha said the appreciation of the yuan will help reduce the impact on China's economy due to the rising prices of oil and other raw materials on the international market and improve the country's trade relations with other countries.

The two economists agreed that the aim of adjusting the foreign exchange rate is to form a reasonable mechanism which will help ensure a balanced and sustained development of the country's economy and reduce the risks caused by external factors.

Zhou Xiaochuan, governor of the People's Bank of China, has said the adjustment of renminbi's exchange rate depends on a stable macroeconomic environment, a healthy market scheme and a sound financial system.