The weightings did not need to be publicised, as with the Singapore dollar, which used to be pegged to an undisclosed trade-weighted basket.

Goldman Sachs Group vice-chairman Kenneth Courtis said a 5 to 10 per cent appreciation of the yuan would be appropriate.

But the danger of loosening the yuan's peg to the US dollar lay in market expectations of a further upward adjustment, Mr Gulliver said, which would, by itself, create more volatility.

The lack of a hedging mechanism for the yuan was a problem faced by foreign investors, who were not in the speculative business, said Jack Rodman, a partner at accounting firm Ernst & Young.

Mr Rodman added that cumbersome restrictions on currency conversion needed to be addressed to make foreign direct investment more efficient.

The bankers agreed with People's Bank of China governor Zhou Xiaochuan that currency regime reforms should be pursued, and that it was up to the central government to decide when to loosen the peg.

They also agreed the yuan debate was being driven largely by politics, overshadowing economic or financial concerns.

Mr Gulliver calculated the mainland accounted for only 10 per cent of the United States' trade volume. If the yuan's value increased by 25 per cent, it would reduce the trade deficit at most by only 2.5 per cent.

Given the wide relative wage disparity between the mainland and the US, the bilateral trade gap would continue to exist, Mr Gulliver said.

Li Jiange , deputy director of the State Council's Development Research Centre, said politicising the debate made finding solutions more difficult.

'We believe it is purely an economic issue, but US congressmen are trying to make it a political issue,' he said.

The mainland's main trading partners, in particular the US, have been vocal in demanding that Beijing revalue its currency, claiming that an undervalued yuan amounts to unfair competition.

Additional reporting by Cary Huang