Market eventually will 'decide rate' of yuan exchange

China will reduce its intervention in the foreign exchange market through a step-by-step process as it gradually pushes for foreign exchange reform, said central bank chief Zhou Xiaochuan.

"The direction is clear for China's foreign exchange market reform. We'll keep the yuan's exchange rate at a reasonable and balanced level and let the market decide the rate," Zhou said on the sidelines of the China-US Strategic and Economic Dialogue in Beijing on Thursday.

Zhou, who as governor of the People's Bank of China is in charge of the nation's monetary policy, said the central bank will still remain cautious and that it will intervene in the market if major fluctuations occur as major countries adjust their monetary policies.