In a statement issued on June 19, Obama praised China's decision to increase the flexibility of its exchange rate, which officials hope will help balance China's trade deficit with the United States and Europe.

China's State-run Xinhua news agency said The People's Bank of China-- China's central bank - announced on June 19 it would push further its rate reform to make the yuan, more flexible. The move could appease international criticism against China's weak exchange rate, which has created trade imbalances between Western nations and China.

The International Monetary Fund's managing director, Dominique Strauss-Kahn, released a statement on China's move, which he described as a "welcome development”.

China's move comes ahead of the Group of 20 and the Group of 8 meetings in Canada's Province of Ontario scheduled next week, with finance ministers and central bank governors of major trading powers will discuss trade issues and the world financial crisis.

Representatives of several industrialized nations including India, Brazil, the United States and European countries have previously asked China to allow its currency to float.