China will allow market forces to play a greater role in the setting of the Chinese currency's exchange rate.

"We will further improve the mechanism for the formation of the renminbi's exchange rate and allow supply and demand in the market to play a bigger role in determining the rate," Premier Wen Jiabao said at the opening ceremony of the annual meeting of the African Development Bank Group.

Wen said the economy and the financial system are generally in good shape but the country faces such challenges as increasing imbalance in international payments, rapid increase of foreign exchange reserves as well as excessive liquidity.

To solve these problems, the country is employing a host of financial instruments to control credit growth and money supply, he said.

"We are capable and we have the necessary means to deal with them," he said.

Source: China Daily