WASHINGTON - US Treasury on Tuesday said in a statement that it would continue to monitor reform moves of China, reiterating that policies that reflect China's desire to move towards a consumption-driven economy are in the best interests of China and America.

The statement came in response to China's move to improve its foreign exchange system.

The People's Bank of China (PBOC) on Tuesday announced the decision to improve its central parity system to better reflect market development in the exchange rate between the Chinese yuan against the US dollar. Following the decision, the Chinese currency, yuan, fell sharply in value on Tuesday.

The US Treasury said in the statement that "while it's too early to judge the full implications of the change in the PBOC reference rate, China has indicated the changes announced today are another step in its move to a more market-oriented exchange rate."

The Treasury admitted China's progress in promoting financial reforms, including its commitments made at the recent China-US Strategic and Economic Dialogue to move towards a more flexible, market-determined exchange rate, limit foreign exchange intervention, and increase the transparency of its exchange rate policies.