The Obama administration welcomed Saturday China's decision to allow a more flexible exchange rate for its currency, ending a two-year peg to the US dollar, according to dpa. The Chinese central bank said Saturday that the nation's economy was on solid footing. "It is desirable to proceed further with reform of the (renminbi) exchange rate regime and increase the (renminbi) exchange rate flexibility," it said in an English statement. However it said their was no cause for a "large-scale appreciation." US President Barack Obama welcomed the announcement just days before a gathering of the group of 20 (G20) economic powers in Canada, calling it a "constructive step that can help safeguard the recovery and contribute to a more balanced global economy." US Treasury Secretary Timothy Geithner further said the move "would make a positive contribution to strong and balanced global growth" and called on China to continue working on the issue with the G20 and in bilateral efforts with the United States. Concern about China's currency exchange has been growing for years. The US is among the sharpest critics, calling the currency artificially undervalued and saying it hurt competition. In a letter to other G20 leaders ahead of the June 26 and 27 meeting, Obama said there remained "significant weaknesses" across the G20 that were creating imbalances in the global economy. In a more direct attack at China's currency Obama said that allowing markets to determine exchange rates "are essential to global economic vitality." Since 2008, the Chinese currency has been held steady at a rate of 6.80 yuan to the dollar. International Monetary Fund Managing Director Dominique Strauss- Kahn said the decision was "very welcomed development."
