The U.S. Treasury Department said on Sunday that a wider yuan trading band could help reduce global trade imbalances if it allows more play for market forces.

China's decision to widen the daily trading band for its exchange rate, if implemented in a way that allows the value of the exchange rate to reflect market forces, could contribute rebalancing, which would be positive for China, the United States, and the global economy, a Treasury Department official told Reuters.

But the Treasury said the process of correcting a misalignment of China's exchange rate is still incomplete and said more progress was needed.

While we welcome the progress to date, the process of correcting the misalignment of China's exchange rate remains incomplete, and further progress is needed, the Treasury said.

U.S. manufacturers complain that China's yuan is so undervalued that it gives Beijing an unfair trading advantage and they blame it for having cost millions of lost American factory jobs.

The Treasury announced on Friday that a semi-annual report to Congress on currency practices of major trading partners, including China, that was due on April 15 was being delayed until after a series of upcoming international meetings.

(Reporting by Glenn Somerville; Editing by Sandra Maler)

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