BEIJING -- China's central-bank governor said a stronger currency isn't the best or only way to fight inflation, countering widespread expectations that the yuan's gains will accelerate as the nation's prices rise at their fastest pace in more than a decade.

"Faster currency appreciation helps to rein in inflation, but not a lot," Zhou Xiaochuan, governor of the People's Bank of China, told reporters on Thursday. "To curb inflation, we will rely more on domestic policies....There is no need to use exchange-rate reforms as a way to fight inflation."

Mr. Zhou's statements were unusual because the central bank is widely seen as an advocate of a stronger currency, a policy that is disliked by exporters and often has been opposed by other parts of the Chinese bureaucracy. Indeed, in its October monetary policy report, the People's Bank of China wrote that "Theoretical economic analysis and the experience of many countries both show that an appreciation of the currency helps contain domestic inflation."

China has pushed up the yuan at a faster rate against the dollar since inflation first surged above 3% in March last year. The Chinese currency rose 4.2% against the dollar in the second half of last year alone, and is up a further 2.6% this year. (Because the dollar is falling against other currencies, the yuan is down 1.9% against the euro this year.)

But consumer-price inflation has also accelerated, because of rising global prices for crops and domestic shortages of products such as pork. It touched 7.1% in January, the highest since 1996.

The government wants to contain inflation at 4.8% or less for the full year, though Premier Wen Jiabao warned in a speech Wednesday that "upward pressure on prices will remain great this year." Other measures the government has adopted include temporary price controls on food, increased farm subsidies and a freeze on prices of fuels and public services.

A typical argument for using a stronger currency as an inflation-fighting tool is that it makes imports less expensive. But some analysts have questioned whether a stronger currency would do much to calm China's food prices, the main driver of inflation recently. Although China is a big importer of a few agricultural products, such as soybeans, it has been a net exporter of food for many years.

Yet most outside analysts believe that a stronger currency still is the most likely way for China to address inflation. That is especially true since central-bank officials have signaled that while more interest-rate increases are not out of the question, their ability to raise rates is constrained by falling interest rates in the U.S. Their worry is that higher interest rates would tempt investors unhappy with low U.S. rates to put more money into China, inflows that could undermine some of the restrictive effects of higher interest rates.

"We believe currency appreciation remains a viable, and the most optimal, policy tool for China to cure its inflation problems without generating a hard landing for the overall economy," Goldman Sachs economist Hong Liang wrote in a recent report.

Write to Andrew Batson at andrew.batson@wsj.com and Jason Leow at jason.leow@wsj.com

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