IMF Calls on Asian Countries to Appreciate Their Currencies

(MercoPress)

Asia is leading the world out of the worst economic crisis in six decades and should play a “leadership role” in policy makers’ effort to achieve a new global growth model, Strauss- Kahn said in a speech on Friday at the Monetary Authority of Singapore.

“Based on our analysis, many Asian currencies are still undervalued related to those of their major trading partners, while the Euro is somewhat overvalued on this basis,” Strauss- Kahn said. “The region should not resist a gradual appreciation of its exchange rates, which I consider an important prerequisite for long-term rebalancing.”

Growth in Asia will accelerate to 5.75% next year, almost twice the pace of global economic expansion, the IMF estimates. Still, with China’s fixed-rate policy, the Yuan has followed the dollar’s 14% decline in the past year against the currencies of six major trading partners, prompting central banks in India, South Korea, Thailand and Taiwan to accelerate dollar purchases to curb currency appreciation.

Policy makers are seeking to ensure the return to economic growth is more balanced. Emerging Asian economies need to boost domestic demand, while the region’s nations would benefit from increased intra-regional trade that could reduce their dependence on other parts of the world, Strauss-Kahn said. Read more here.

Related:

China’s Commerce Ministry: Call For Yuan Appreciation Unfair

(RTT News)

The Chinese yuan exchange rate should be kept stable, Commerce Ministry spokesman Yao Jian told reporters on Monday. He said the Chinese policy is helping the global recovery and it is unfair to urge one nation to appreciate their currency as other currencies weaken.

Meanwhile, the chairman of the China Banking Regulatory Commission Liu Mingkang said in Beijing that low interest rates in the U.S. and a weak dollar affected global asset prices and generated speculation. Also, the official said, it developed risks to global economic recovery, especially in emerging-market economies. Read more here.