BEIJING, April 18 (AFP) – The Asian Development Bank urged Beijing to loosen its grip on its currency, saying a more flexible exchange rate would benefit China as well as Asia-Pacific countries.

The Manila-based lender entered the fray in the mounting debate over the value of the yuan as it released its 2010 development outlook, in which it said China needed to boost domestic consumption to curb its dependence on exports.

International critics have accused China of keeping the yuan undervalued to give its exporters an advantage by making their products cheaper. Beijing counters that the policy is needed for its manufacturers' survival.

''Now as the global economy picks up it would be... in China's interests but also in the interests of the economies in the region to gradually shift towards greater exchange rate flexibility,'' ADB country director Robert Wihtol told reporters.

The bank said in its outlook report that Chinese policymakers may ''tolerate'' a slight increase in the yuan in 2010 and 2011 amid sustained economic growth, revived inflation and a ballooning trade surplus.

Speculation is growing that Beijing may soon alter its exchange rate policy as international pressure intensified for a stronger yuan -- effectively pegged at around 6.8 to the dollar since mid-2008.