REUTERS in Beijing

Beijing's top financial officials have pledged to push towards making the pegged yuan more flexible over time, but stressed the need to avoid volatility, state media said yesterday.

The remarks came amid intensified speculation that Beijing might accelerate steps to unshackle the yuan, which has been virtually pegged to the US dollar since the 1997-98 Asian financial crisis.

"A perfect renminbi exchange rate mechanism, while keeping the renminbi basically stable at a rational and balanced level, is the direction and goal of exchange rate reform," Financial News quoted deputy central bank governor Li Ruogu as saying. "We have already made a host of fundamental preparations and achieved active progress."

The reforms would proceed in a "gradual and steady" manner by taking into account the impact on domestic and global economies, Mr Li said.

The China Reform Daily quoted Guo Shuqing , head of the State Administration of Foreign Exchange, as saying Beijing hoped to have a flexible exchange rate. "Stability does not mean there will not be flexibility. China also hopes to have certain flexibility in the exchange rate, but will control volatility."