China's central bank governor, Mr Dai Xianglong, said yesterday that a devaluation of the yuan was unlikely this year.

At a news conference in Beijing, Mr Dai also promised to implement a more flexible monetary structure and relax controls on interest rates.

"There are no benefits to devaluation," the People's Bank of China (PBOC) chief said two days after renewed fears that the yuan might be devalued had undermined Asian financial markets.

"It would hurt foreign investors and increase the foreign debt burden of China and it is not conducive to the stability of the financial sector," he said.

"Only if there was a great imbalance in the balance of payments and the cost of exports greatly increased [would there be pressure to devalue]," the central banker said.

"These problems you talk of are not going to happen this year."

Mr Dai said in a statement released before the news conference that China "has committed to non-devaluation" and had "full confidence" it would not devalue.

He said the stability of the yuan exchange rate "still has firm ground", adding that an "analysis of the exchange rate formation also shows that the yuan will not devalue".

Other factors against a devaluation included the level of China's foreign exchange reserves, which exceeded one year's total import payments, stable export purchase prices, relatively low interest rates and higher export returns for some products, he said.

Mr Dai also announced that the PBOC would implement a more flexible interest rate structure.

It would also expand the band and eligibility for floating interest rates on yuan loans and gradually lift its controls over foreign currency loan interest rates.

Hints of a devaluation in the official China Daily's business weekly edition on Sunday, from which the central bank later distanced itself, sent financial markets in the region plunging on Monday.

The report quoted "some analysts" as saying a devaluation or flotation of the currency "would not definitely be a bad thing and may not trigger a fresh round of currency devaluation that has been feared by most people."

Mr Dai said "there is only one Chinese government that decides on national policies."