Nov. 6 (Bloomberg) -- Chinese central bank Governor Zhou Xiaochuan said his country isn’t under a lot of foreign pressure to let the yuan strengthen.

“The pressure from the international community to allow yuan appreciation is not that big,” Zhou told Bloomberg News as he arrived in St. Andrews, Scotland for a meeting of officials from the Group of 20 nations.

The comments come a day after European Central Bank President Jean-Claude Trichet said a stronger yuan would help rebalance the global economy. UBS AG, the world’s second-largest foreign-exchange trader, said today it expects G-20 finance chiefs to use the weekend summit to urge Asian nations to allow their currencies to appreciate.

“The eurozone and other G-10 nations wish to see the yuan strengthen, somewhat in contrast to Governor Zhou’s view,” said Geoffrey Yu, currency strategist in London at UBS, in an interview. “We believe the yuan will remain stable.”

China, the world’s third-largest economy, has kept a lid on its currency since July 2008 after it strengthened 21 percent against the dollar over the previous three years.

That’s helping the yuan track the U.S. currency’s decline against other currencies. While it aids Chinese exporters, it’s also triggering concern in other countries whose companies are feeling the pain of the dollar’s dive.

Yuan Call

“An orderly and progressive appreciation of the currencies of the emerging economies, particularly in Asia and of course the currency of China” would be “welcome,” Trichet said yesterday.

Pressure on China this weekend may come from the G-20’s efforts to rebalance the world economy away from U.S. demand and Chinese savings. The officials are crafting a framework to guide the transition to a more even global expansion that economists say will need China to spur domestic demand.

Zhou also said today that asset bubbles are not as “serious” a problem in China as some economists say. The World Bank said this week that China’s policy makers must avert stock and property market bubbles after lending swelled to a record $1.27 trillion this year.

Some strategists say China may escape direct criticism this weekend as officials focus on how to sustain the economic recovery, though it’s likely to face growing demands to let the yuan climb next year.

“This G-20 is about emphasizing things are getting better and when you have that kind of forum, you’re not going to get much pressure on China,” said Peter Frank, a currency strategist at Societe Generale SA in London. “But in a few months, if its economy and exports are still strong, you’re going to see the screws turned on it.”

To contact the reporter on this story: Zijing Wu in London at zwu17@bloomberg.net

Last Updated: November 6, 2009 12:39 EST