U.S. Treasury official says China trying to keep yuan from falling more

The official, who spoke to a group of reporters but asked not to be named, urged Beijing to allow the currency to rise and fall freely.

The comments preceded a state visit to Washington by Chinese President Xi Jinping on Sept. 25, in which Xi and President Barack Obama will discuss economic ties between the two countries as well as their increasingly testy relationship over security matters.

Washington has long urged Beijing to let the yuan appreciate, arguing that China was using a weak currency to make its goods cheaper in America.

But China these days is facing doubts in financial markets over the strength of its economy. The Treasury official said China's decision to loosen restrictions on currency trading last month, which prompted a sharp fall in the yuan's value, appeared to be perceived in markets as having the intention to prop up China's economy, sowing further doubts among investors.

The official said China should not feel like it needs to step in and stop declines in financial markets every time investors send it signals about the economy.

He said China's commitment to letting market forces play a bigger role in the value of the yuan will earn more credibility when it allows market forces to push its value up.

(Reporting by Jason Lange; Editing by James Dalgleish, Andrew Hay and Leslie Adler)