"It won't be advanced by any foreign pressure."

Hu said that changes would come based on China's "own economic and social development needs".

Cui Tiankai, the vice-foreign minister said on Tuesday that he does not believe the world's economic problems are tied to its exchange rates.

'Bad domestically'

Many economists have criticised China for pegging its currency to the dollar. They say it gives Beijing an unfair advantage by making Chinese exports artificially cheap at the expense of US exports and jobs.

China has tied the yuan to the US dollar for decades, but has effectively pegged it at 6.8 to the US dollar since mid-2008.

Al Jazeera's Melissa Chan, reporting from Beijing said that "there is a group of people here who feel that they need to revalue the Chinese currency but the problem is that they can't be seen to be bowing to American pressure".

"Its very bad domestically and it puts the Chinese government in a position of weakness."

Obama, however, did admit that "the issue of currency is a sovereign issue".

"I think China rightly sees they are resistant to international pressure when it comes to them making decisions about their currency policy and monetary policy," he said.

The US president also said that it is China's interest to raise the value of its currency.

"It is actually in China's interest to achieve this, because over time, China's going to have to shift away from an economy that is solely oriented'' towards exports and move to an economy that emphasises "domestic consumption and production".

'Currency manipulator'

The comments came after the US treasury secretary visited Beijing last week for high-level talks on the long-running dispute.

The US says China's policy on the yuan makes its exports unfairly cheap [EPA]

US legislators have been pushing Timothy Geithner to label China a "currency manipulator", a move that would open the door to sanctions.

They blame the peg for contributing to a US trade deficit that soared to nearly $227bn in 2009.

But last weekend, the US treasury announced it was delaying a report that had been expected in mid-April and could have tagged China as a "manipulator", with Geithner saying there were better ways to advance US interests.

The delay triggered an angry reaction from some US politicians who have been calling for sanctions against China to force it to change its policy.

But some analysts have said that China appears ready to shift its position, and Geithner's impromptu trip could be further evidence of efforts to reach a compromise on the thorny issue.