IMF moots new exchange rate norms
IMF approves new guidelines to avoid exchange-rate policies that result in external instability.
WASHINGTON: The International Monetary Fund approved new guidelines calling on its 185 members to reject currency policies that create instability for other countries, said Managing Director Rodrigo de Rato.
The Washington-based fund, which monitors economic policies of its members, adopted a new principle that ``a member should avoid exchange-rate policies that result in external instability,'' De Rato said in a speech today in Montreal. The change in the fund's surveillance policies is the first in 30 years, he said.
``It gives clear guidance to our members on how they should run their exchange-rate policies, on what is acceptable to the international community, and what is not,'' he said.
IMF guidelines currently call on members to avoid manipulating exchange rates to get an ``unfair competitive advantage.'' Countries should also intervene to counter ``disorderly conditions.''
The new guidelines come after the U.S. Treasury Department last week declined to name China a currency manipulator, while chiding its second-largest trading partner for an ``undervalued'' currency. Some members of Congress contend China keeps the yuan undervalued by as much as 40 percent to help Chinese exporters, contributing to a record U.S. trade deficit and leading to job losses.
The U.S., the largest shareholder in the IMF, has pushed for two years for a stronger effort by the fund to monitor currency policies.
``The revised decision sends a strong message that the IMF will put exchange-rate surveillance back at the core of its duties,'' Treasury Secretary Henry Paulson said today in a statement. It ``shows the IMF is serious about reforming itself and enhancing its legitimacy and relevance in today's global economic and financial system.''
The Washington-based fund, which monitors economic policies of its members, adopted a new principle that ``a member should avoid exchange-rate policies that result in external instability,'' De Rato said in a speech today in Montreal. The change in the fund's surveillance policies is the first in 30 years, he said.
``It gives clear guidance to our members on how they should run their exchange-rate policies, on what is acceptable to the international community, and what is not,'' he said.
IMF guidelines currently call on members to avoid manipulating exchange rates to get an ``unfair competitive advantage.'' Countries should also intervene to counter ``disorderly conditions.''
The new guidelines come after the U.S. Treasury Department last week declined to name China a currency manipulator, while chiding its second-largest trading partner for an ``undervalued'' currency. Some members of Congress contend China keeps the yuan undervalued by as much as 40 percent to help Chinese exporters, contributing to a record U.S. trade deficit and leading to job losses.
The U.S., the largest shareholder in the IMF, has pushed for two years for a stronger effort by the fund to monitor currency policies.
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``The revised decision sends a strong message that the IMF will put exchange-rate surveillance back at the core of its duties,'' Treasury Secretary Henry Paulson said today in a statement. It ``shows the IMF is serious about reforming itself and enhancing its legitimacy and relevance in today's global economic and financial system.''
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