China needs to depreciate the renminbi against the US dollar to cushion the greenback's sharp appreciation versus other major currencies over the past months, a researcher from a top government think tank said on Tuesday.

"As part of the macro-control measures, adjustment of the renminbi's exchange rate is reasonable and necessary," Pei Changhong, director of the Institute of Finance and Trade Economics under the Chinese Academy of Social Sciences, said at a press conference held in Beijing.

"If the dollar continues to rise again the euro, we will have to further adjust the renminbi," said Pei, adding a proper exchange rate level should support the nation's export sector.

Pei's comments came on the heels of the renminbi's largest one-day fall against the dollar on Monday.

Some analysts say the fall is a sign that the government may have decided to use depreciation to bolster the struggling export sector and alleviate unemployment.

The nation's economy has been losing steam in the year as the worsening world financial situation is poised to drag most of the major developed economies into recession.

The export sector is most severely impacted, largely due to the appreciation of the Chinese currency and shrinking overseas demand.

The renminbi has gained about 7 percent against the US dollar in the first half, amounting to about 20 percent rise of the yuan since China decided to scrap its peg to the greenback in 2005.

Over the past two months, the dollar has gained more than 20 percent against the euro, leading to a de facto appreciation of the yuan, which remained largely stable against the dollar.

"An adjustment (of the yuan) could help balance its exchange rate with the euro," said Pei.

The European Union is now China's largest export destination, a market local exporters would be eager to defend given that US consumers have already started to cut spending.