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.

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.

China should continue to implement a prudent monetary policy, it said.

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.

The Chinese currency has gained more than 3 percent since July last year.

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.

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.

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."

Source: Xinhua