China’s central bank has denied reports that Beijing plans to loosen the link between the Chinese currency and the dollar, though remarks by economists suggesting a change was imminent shook financial markets overnight.

A member of the monetary policy committee at the central bank, Yu Yongding, told journalists attending the World Economic Forum in Davos, Switzerland, that given the dollar’s recent weakness, "now is the time to revalue ... We need more flexibility. That means revaluation."

However, an official in the People’s Bank of China’s information office told the AFP newswire that Yu was an academic adviser, not an official, and that his opinion did not reflect official policy.

"Yu Yongding’s remarks are only his personal view, and the opinions of an academic. It does not represent the central bank’s policy," the official said.

Although currency analysts played down the significance of Yu’s comments, the dollar slipped against the Japanese yen in New York trading late Thursday.

The greenback opened lower Friday in Tokyo but rebounded to trade at 103.19, down 0.05 from Thursday but higher than the 103.10 yen it bought in New York later that day. The dollar was also lower against other regional currencies.

It isn’t the first time a mainland academic or official has argued for a change in the link between the dollar and the yuan, also known as renminbi, or "people’s money".

Such comments fan speculation that usually is met with government denials of any plans for a change soon.

Earlier this week at Davos, another prominent Chinese economist said Beijing has lost faith in the dollar’s stability.

China’s first priority was to broaden the exchange rate from the dollar to a more flexible basket of currencies, said Fan Gang, who as director of the National Economic Research Institute at the China Reform Foundation is also not a government official.

"The US dollar is no longer in our opinion a stable currency, and is devaluating all the time, and that’s putting troubles all the time," said Mr Fan.

"So the real issue is how to change the regime from a dollar pegging to a more ... diversified system," he said. China tightly controls foreign exchange dealings and keeps the yuan trading in a narrow range around 8.28 yuan to the dollar.

Beijing says it plans to gradually let the yuan trade more freely, but has given no timetable, contending that China’s fragile financial system requires a stable currency.

Critics of Beijing’s foreign exchange policies argue that the yuan is undervalued, making China’s exports cheaper and giving its manufacturers an unfair trade advantage.

Many in global currency markets anticipate some move from China this year, most likely a widening of the band, although few expect an immediate change.

The talk of loosening the yuan’s dollar link came just ahead of next week’s meeting of financial ministers of the Group of Seven industrial nations, where the issue is bound to resurface.

China’s finance minister, Jin Renqing, and the central bank governor, Zhou Xiaochuan, will attend that meeting and "promote understanding among the other countries," Foreign Ministry spokesman Kong Quan said yesterday in Beijing.

"They will introduce to the meeting the current situation of China’s economy and the Chinese government’s stance on issue of the renminbi," Mr Kong said.

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