MercoPress, en Español

Montevideo, March 28th 2024 - 23:08 UTC

 

 

IMF to focus country surveillance on exchange rates impacts

Wednesday, August 13th 2008 - 21:00 UTC
Full article

The International Monetary Fund said on Tuesday it will enter talks with countries whose exchange rates do not reflect economic fundamentals and cause problems for other nations and the global economy.

The ad hoc consultations are part of a process outlined in new guidelines the IMF issued on how it would implement rules on currency surveillance introduced more than a year ago. "I believe we all agree that exchange rates are at the heart of the Fund's mandate, and that in this connection the Fund must deliver good analysis and clear assessments, with the ultimate aim of helping to focus the minds of policymakers and encouraging appropriate policy responses" said Mark Allen, director of the IMF Policy Development and Review Departments. Allen said consultations would be initiated if the IMF becomes concerned that a country is violating rules that govern global currency relations or that a currency may be significantly misaligned and causing external instability. "The purpose of this is to persuade members to adjust their policies in their own interest and in the interest of the international system," Allen said. "Ultimately, this is not about pinning labels on countries. It's about trying to ensure that policies are adjusted so that we can get a smoother development of the international economy and more crisis-free adjustment process," he added. Allen said since the rules were introduced last June, the IMF has stepped up its discussions with member countries on exchange rate policies and has at times encountered difficulties in defining currency misalignment. IMF issued the new guideline in an effort to help clarify the global currency rules. But no smooth ride is expected since the guidelines could be interpreted as aimed at pressuring China over its currency policy. China has opposed the IMF new rulebook and has pushed back at the Fund's heavy prodding over its exchange rate. It has delayed the completion of the IMF annual assessment of its economy, which details annual economic consultations between the IMF and Chinese officials. While China is not the only country that has had problems with the rules, it is by far the most important. There is now concern that the IMF use of special consultations will be seen by a sensitive Chinese government as yet another bid to compel it to let its currency rise faster. Allen said the IMF was discussing currency concerns with "a number of countries." "There are other countries where we face similar questions to those we face in the case of China, and I think it's important we address all these other cases evenhandedly so that China doesn't feel singled out" he said. Under the guidelines, special consultations would be initiated informally and confidentially by the head of the IMF if fund staff have evidence a country is violating the rules.

Categories: Economy, International.

Top Comments

Disclaimer & comment rules

Commenting for this story is now closed.
If you have a Facebook account, become a fan and comment on our Facebook Page!