The Chinese yuan, also known as the renminbi, is already convertible under the current account - the broadest measure of trade in goods and services. However, the capital account, which covers portfolio investment and borrowing, is still closely managed by Beijing because of worries about abrupt capital flows.
Beijing says yuan has reached equilibrium against US dollar
China says its currency has approached its equilibrium rate against the US dollar, indicating chances are slim that the yuan will continue rising significantly.
People's Bank of China governor Zhou Xiaochuan , in a speech delivered in Tokyo on his behalf by one of his deputies, stressed the yuan's valuation is mainly determined by the market, not government intervention.
It was an apparent response to vocal concerns among US politicians, including Republican presidential nominee Mitt Romney, that the currency is deliberately undervalued.
Zhou said the central bank had refrained from intervening in the market in the past year, while the exchange rate had remained at around 6.3 yuan per dollar.
"The rate, the spot rate and future rate, determined by the market supply and demand, basically are very close to the equilibrium rate," Zhou said. The yuan had risen more than 30 per cent against the US dollar in nominal terms since 2005, he said.
The speech was delivered yesterday after the annual meetings of the IMF and World Bank in Tokyo, at which Zhou was represented by his deputy Yi Gang .
On Friday the US Treasury delayed the release of its semi-annual report on the currency policies of major trade partners amid pressure to brand China a serial currency manipulator.
Romney has repeatedly promised he would label China a currency manipulator on his first day in office as president. On Saturday he told supporters in Ohio: "It's time for us to stand up to China for their cheating."
Associated Press, Agence France-Presse, Bloomberg