China's move to make trading of its currency more flexible was a positive step that would help buoy the country's domestic demand, a senior Japanese government official said on Monday.
Japanese officials also said Japan has yet to pledge its contribution to the International Monetary Fund, but was still considering an increase in funding to help it deal with Europe's debt crisis while watching the stance of other countries.
China took a key step in turning the yuan into a global currency on Saturday by doubling the size of its trading band against the dollar, pushing through a crucial reform that further liberalises its nascent financial markets.
Continuing to expand (the yuan's) flexibility further will help China develop further by shifting its weight towards domestic demand, the official told reporters on condition of anonymity. He added that the move was expected to aid price stability in China.
It is in the same direction as Japan and China are aiming at through their financial cooperation, he said.
Japan and China agreed at a summit in December to strengthen financial cooperation, including increased use of the yuan and yen in bilateral trade as well as purchases by Tokyo of Chinese government bonds.
Group of 20 financial leaders gathering in Washington this week will focus on proposals for countries to contribute more money to the IMF so it is better prepared in case of any further escalation of Europe's debt problems.
The senior government official said Japan would finalise the amount of its IMF contribution as early as possible, but noted the differences of opinions among countries on the euro zone's efforts to tackle its debt crisis.
Finance Minister Jun Azumi said nothing concrete has been decided on Japan's IMF funding.
We are still coordinating opinions with other countries ahead of the G20, Azumi told reporters.
(Reporting by Tetsushi Kajimoto; Editing by Richard Pullin)