UPDATE 1-China's Zhou says to continue with yuan reforms

* Zhou says China pursuing reform despite stable yuan policy

* Achieving global status for yuan will be gradual process (Adds detail, background)

SHANGHAI Oct 30 (Reuters) - China will continue to pursue currency reforms despite having adopted a special policy to maintain yuan stability to cope with the global financial crisis, central bank governor Zhou Xiaochuan said on Friday.

He added that the yuan should eventually achieve a certain international status, although this would be a gradual process.

China revalued its currency against the dollar in 2005 and allowed it to steadily appreciate until the middle of last year, but then began using its system of daily reference rates to establish a virtual peg against the U.S. currency to help cushion its economy against the impact of the global financial crisis.

"We have decided on a yuan reform path, but at the same time we can take a special approach during times of crisis," Zhou said in a speech.

The spot yuan rate against the dollar has held steady since July 2008, but growing confidence in the economic recovery has recently stoked expectations that the yuan may soon begin to appreciate once more.

The degree of future yuan appreciation implied in offshore dollar/yuan non-deliverable forwards (NDFs) CNY1YNDFOR= surged this month, reaching 4.55 percent in the one-year forwards on Oct. 20, the highest in more than a year.

Analysts foresee a number of scenarios, including commodity price-driven inflation or an influx of speculative funds from overseas, that could trigger a renewed round of yuan appreciation similar to its 19 percent rise against the dollar from 2005 to 2008. [ID:nSHA214323]

Zhou also reiterated China's ambitions for the yuan to achieve international status, although at a gradual pace.

Zhou caused a stir in March by implying that greater use should be made of the IMF's Special Drawing Rights in place of the dollar as the world's primary unit of foreign exchange, while China's plan to develop Shanghai as a world financial centre over the next decade also calls for a global role for the yuan.

Strict capital controls are expected to hinder global use of the yuan for many years to come, although its use is spreading in trade settlement schemes and currency swap agreements. [ID:nHKG293990] (US$1=6.832 Yuan) (Reporting by Samuel Shen and Edmund Klamann; Editing by Ruth Pitchford)