TASHKENT, May 1 (Reuters) - A more flexible yuan will help balance the Chinese economy, but Beijing alone must decide on when and how to adjust its currency policy, the head of the Asian Development Bank (ADB) said on Saturday.

The yuan has been pegged to the U.S. dollar since July 2008, drawing criticism from abroad and becoming a key source of tension in relations with the United States.

A more flexible yuan will help the Chinese economy to rebalance more smoothly, ADB President Haruhiko Kuroda told a news conference at the start of the ADB's annual meetings in Tashkent.

But he added: For when and how the exchange rate of Chinese yuan (should be reformed), it is, and must be, decided by the Chinese government.

A month ago, Kurodo said the appreciation of the yuan was in the interests of Asia. [ID:nSGN002344]

In a publication launched by the ADB at the news conference, a report co-authored by private-sector economic experts Manu Bhaskaran and Ritwick Ghosh stated that the Chinese yuan is probably undervalued and needs appreciation.

When asked, Kuroda said the views were not necessarily the official stance of the ADB.

In an interview with Reuters, Jong-Wha Lee, the chief economist of the Manila-based bank, said that it was in China's interest to end the yuan's peg to the U.S. dollar and to allow the currency trade in a broader band. [ID:nTOE64000N] (Reporting by Zhou Xin, Rie Ishiguro and Yoo Choonsik; Editing by Jeremy Laurence)