Washington (CNN) -- President Barack Obama welcomed Saturday's news that China's central bank will allow its national currency to float ahead of the G-20 summit in Toronto, Canada, next week.
In a statement issued Saturday, 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 decision to increase the flexibility ... is a constructive step that can help safeguard the recovery and contribute to a more balanced global economy," the president said in the statement.
"I look forward to discussing these and other issues at the G-20 Summit in Toronto next weekend," he said.
China's official Xinhua news agency said The People's Bank of China -- China's central bank -- announced Saturday it would push further its rate reform to make the the yuan, also known as the renminbi, 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 decision was made in view of the recent economic situation and financial market developments at home and abroad, and the balance of payments (BOP) situation in China," Xinhua quoted the Central Bank's spokesperson.
"The stability of the RMB (renminbi) exchange rate has played an important role in mitigating the crisis' impact, contributing significantly to Asian and global recovery, and demonstrating China's efforts in promoting global rebalancing," he said.
The International Monetary Fund's managing director, Dominique Strauss-Kahn, released a statement on China's move, which he described as a "welcome development."
"A stronger renminbi is in line with findings of the G-20 Mutual Assessment Process, to be presented in Toronto next week, and will help increase Chinese household income and provide the incentives necessary to reorient investment toward industries that serve the Chinese consumer," he said.
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.