China's cheap exports are helping drive its rapid economic growth

At present, the yuan is allowed to move by a maximum of 0.3% either above or below a daily target rate.

Mr Zhou said that there was a chance that band would be widened in future.

The US has long been calling on China to change its currency policy, claiming that Beijing keeps it artificially low in order to boost demand for exports.

"The floating range for the yuan could be widened, but we need to look at domestic and international needs," Mr Zhou said.

He continued that China would gradually relax its controls on the yuan.

The comments come as China's Premier Wen Jiabao predicted that China's economy would grow by 8% this year and by an average of 7.5% over the next four years.

He also promised to take measures to close the divide between the new rich and numerous poor, and provide extra money for rural areas and farmers.