China's yuan currency weakened against the dollar, the first trading day after a landmark move by Beijing aimed at liberalising its tight controls over the currency.

The People's Bank of China said on Saturday the unit would be allowed to fluctuate by 1% above and below a daily midpoint, double the previous 0.5%.

The long awaited move followed pledges by Chinese leaders to make the tightly controlled exchange rate more flexible as a step towards allowing the yuan to become freely convertible.

The central bank set its trading midpoint at 6.2960 yuan to the dollar today, weaker than Friday's central parity rate of 6.2879, the People's Bank of China said.

Analysts said the move followed confidence among policymakers that the currency will not appreciate sharply, despite accusations by major trading partners that China keeps the yuan weak to benefit its exporters.

China and the US in particular have been locked in a dispute over the value of the yuan, which US politicians claim is kept artificially low to help Chinese exporters, leading to a massive trade gap.

The US ambassador to China, Gary Locke, last month urged Beijing to end its "unfair" currency policies.