IMF: More flexibility in yuan regime
(AFP)
Updated: 2006-05-26 06:37
The IMF chief has urged China to allow greater flexibility in its currency
regime and open up other sectors of the economy to market forces.
A Chinese woman holds
a handfull of yuan banknotes. The IMF chief has urged China to allow
greater flexibility in its currency regime and open up other sectors of
the economy to market forces. [AFP] | "Our opinion
is that they should allow that (exchange rate) regime to operate more fully,"
Rodrigo Rato, managing director of the International Monetary Fund, said at a
press conference.
"I think what the Chinese economy needs is to have market forces determine
supply and demand in a more efficient way in not only the value of the exchange
rate but also in the allocation of credit, allocation of investments," he said
Thursday.
Rato was in Singapore to attend a conference on regional financial
integration involving finance ministers, central bank governors and officials
from 13 Asian economies.
China is under renewed pressure to allow greater flexibility in its currency
regime almost one year after Beijing revalued the yuan and ended its pegged
currency system.
The yuan has only appreciated marginally against the US dollar, triggering a
backlash especially from Washington that Beijing is deliberately keeping its
currency undervalued to gain an unfair trade advantage.
The US trade deficit with China ballooned to 202 billion dollars last year,
according to US figures and Washington says this imbalance, caused by an
undervalued yuan, cannot be allowed to continue.
Earlier this week, China's central bank reiterated its longstanding pledge to
boost the flexibility of its currency this year but said it would also ensure
the yuan remained stable at a reasonable level.
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