China’s Forex Continues Rigidity

According to US Treasury Secretary John Snow during a press briefing at the close of a meeting of finance ministers and central bankers from the Group of Seven leading industrial nations in London, China’s July reforms to its currency regime was not sufficient amidst the welcomed the end of the yuan being pegged to the US dollar in a favor of other currencies.

"China’s new exchange-rate system has operated with too much rigidity. This rigidity constrains exchange-rate flexibility in the region and thus poses risk to China’s economy and the global economy," Snow said.

Snow also challenged the International Monetary Fund (IMF) to implement its most fundamental responsibility to step up its oversight of members’ exchange-rate policies since the organization’s advice has been too sparing or muted in such issues.

Acting on the US Treasury’s foreign exchange system’s report to the US Congress, Snow’s challenge was in addition to his call last week to IMF’s Managing Director to prepare a report on currency policies for presentation to the IMF board next year.

(Sournce: G7: Tsy’s Snow: IMF Forex Advice Often Too Muted, TheBusinessOnline.Com)