03 October 2009
IMF ups pressure on China to let currency rise
ISTANBUL : The International Monetary Fund on Friday upped the pressure on China to allow its currency to appreciate in order to help rebalance the world economy as a tentative global recovery gets underway.
"China has an interest in reorienting towards domestic demand. If it does this, it has to lower external demand. The way to do this is to change its exchange rate," IMF chief economist Olivier Blanchard said. "We have to work on it. China is open to this kind of strategy. We have to sit down and see where it goes," he said, speaking in Istanbul in the run-up to the IMF and World Bank annual meetings on Tuesday and Wednesday in Turkey's biggest city.
In an interview with French television news network France 24 in Istanbul, the IMF's managing director Dominique Strauss-Kahn said: "The crisis is going to bring with it a sort of rebalancing."
"With this rebalancing, the renminbi could regain some of the value that it should have, since we at the IMF continue to think that the renminbi is undervalued," he added. The yuan is pegged to a basket of currencies and strictly controlled by the nation's foreign exchange authorities. The yuan's nominal effective exchange rate, against a basket of currencies, appreciated by 12.66 percent last year, compared to a 1.69 percent rise in 2007 and a 1.55 percent fall in 2006, according to economists.
- AFP /ls
