Chinese Vice Premier Zeng Peiyan promised that the nation will continue with currency reform, along with acceleration in the reforms of China’s state-owned enterprises and financial institutions. This saying contrasts with the words of Premier Wen Jiabao who said a day earlier that China will not succumb to foreign pressure to speed up its currency reform.

"We will steadily push forward reform of the renminbi exchange rate formation mechanism," Zeng said.
China has held its currency pegged to the US dollar at the rate of 8.28 yuan per dollar since the Asian financial crisis. This gave reason to the US to say that China is enjoying an artificial financial advantage in trade which contributes to the US current account gap.

"Reform of the renminbi’s exchange rate is a matter of China’s own sovereignty," Wen Jiabao was quoted as saying. "Any pressure or media play-up, or politicising an economic matter, will not help solve problems," he said.

US and China are in the middle of a dispute that concerns the reimposition of US curbs on imports of Chinese trousers, shirts and underwear that was loudly protested by Chinese authorities.

The revaluation of the yuan will have a drastic impact on the dollar exchange rate. The greenback is in the middle of a rise that will most probably turn out to be short-term as the central banks of the world’s nations in March for the first time since August 1998 turned out to be net sellers of US assets in March, dumping net $14.4 billion.

“For those central banks that are not managing their currencies, there may well be a feeling that the dollar is not a great bet,” said Adam Cole, currency strategist at RBC Capital Markets.