Asked if he would do it even at a cost of a stock market drop, he said: "If it does it does".
The U.S. dollar pulled back from year-high levels on Thursday after U.S. President Donald Trump expressed concern about a strong currency, while disappointing earnings reports and escalating trade tensions weighed on stocks.
USD/CNY hit fresh one-year high above 6.8.
Currency wars occur when a number of countries seek to depreciate the value of their own currencies in order to stimulate their economies, Investopedia writes.
"The central bank wants to use the currency movements to achieve internal and external economic balance".
The manipulation of the yuan, considered by many to be undervalued, is a direct response to Trump's actions on global trade and protectionism, sparking fears that China could "turn a trade war into a currency war", says Quartz.
If the yuan falls too quickly, it could prompt money to flood out of China as investors lose confidence and seek to exchange it for assets in dollars and other currencies.
His comments did not help to push the dollar down considerably versus the yuan, however. He says ECB President Mario Draghi may elect to step into the fray at the central bank's July 26 policy meeting, given American attempts to talk the dollar down in January were extremely unpopular in Frankfurt. Futures on the S&P 500 Index fell as much as 0.4 per cent. The euro ended the day up 0.7 per cent at US$1.1724, while the yen was nearly 1 per cent stronger.
"Usually the goods only take 10 days to reach U.S. customers", Wu Yuepei, a manager at Qiwang Textile Product, tells Global Times.
Those and other Trump comments that criticised Federal Reserve interest rate hikes caused the dollar to fall back in the U.S. on Thursday.
"If it becomes a more constant drumbeat, it's probably something that is going to weigh on dollar more significantly", said Shaun Osborne, chief FX strategist at Scotia Capital in Toronto.
A cheaper yuan will make Chinese exports less expensive and has the potential to boost sales overseas.
Trump earlier told CNBC that a strong dollar put the United States at a disadvantage and he was ready to place tariffs on $500 billion of imported goods from China.
Chinese imports from the United States totalled $US205 billion ($276.1 billion) in the first five months of 2018, with the deficit reaching $US152 billion ($204.7 billion). "We won't be able to clearly tell".
Rufus Yerxa, president of the National Foreign Trade Council and formerly deputy director general of the World Trade Organization, said Trump appears to think that America's trading partners will yield to pressure without securing any concessions in return.
After Beijing offered this spring to buy more natural gas and farm goods from the U.S.to narrow the trade deficit, Treasury Secretary Steven Mnuchin said the trade war was "on hold".