'Foreign exchange management must not distort competitiveness'<\/p>\n
Dow Jones, Phuket, Thailand<\/p>\n
International Monetary Fund (IMF) Managing Director Horst
\nKoehler doesn't oppose a certain degree of exchange rate
\nmanagement as long as it doesn't distort competitiveness in the
\nmarket.<\/p>\n
In separate interviews with Thai dailies Bangkok Post and the
\nNation published on Saturday, Koehler took a midway stance
\nbetween the U.S. and China on the need for greater currency
\nflexibility.<\/p>\n
"If you are using the foreign exchange regime to improve
\ncompetitiveness, it would lead to competitive devaluation which
\nis an irresponsible act," he told the Bangkok Post.<\/p>\n
"We need to find a win-win approach which creates a strong
\ngrowth path, but not one at the expense of the rest of the
\nworld," he said.<\/p>\n
Koehler was speaking after attending two days of intense talks
\namong finance ministers from the Asia Pacific Economic
\nCooperation forum on process toward exchange rate reform.<\/p>\n
APEC ministers rebuffed a U.S. push for them to call for
\nflexible exchange rate regimes in the region, which effectively
\nwould be a signal to China to loosen its tight grip on the yuan.<\/p>\n
A statement, fudging differing views among participants,
\nvaguely called for "appropriate exchange rate policies" but
\nmerely noted the U.S. view that a flexible exchange rate
\nmanagement promotes greater economic growth and financial
\nstability.<\/p>\n
Asian central banks have adopted varying degrees of exchange
\nrate management since the 1997 financial crisis to protect their
\ncurrencies from speck countries deliberately depreciating their
\ncurrencies to boost growth leads to increased trade
\nprotectionism. He said that sound fiscal policies are a better
\nway to counter currency volatility, once a more flexible exchange
\nrate system is adopted.<\/p>\n
But he also shared China's view that no single currency regime
\nis best for all countries.<\/p>\n
"I don't oppose the idea of having a management element in a
\nway that acts against the market," he told the Nation. "(But) any
\ntime you act against underlying market trends, you put at risk
\nyour own reputation, because the market might fear that something
\nis hidden."<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/foreign-exchange-management-must-not-distort-competitiveness-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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