Timothy Geithner seeks uniform exchange rate policy

 

 

China is accused of keeping its currency artificially undervalued

US Treasury Secretary Timothy Geithner has kicked off the G20 meeting in Nanjing with a call for more consistency in international currency exchange rates.

Mr Geithner said tight control of currency pricing by some countries was hurting global economy.
The United States and other developed nations have been critical of China's exchange rate policy.
The meeting is being attended by some of the financial world's biggest names.
Mr Geithner said that the Group of 20 nations was working closely to put in place a system that will streamline the exchange rates globally.
"We have been engaged in a multilateral effort in the G20 to establish stronger norms for exchange rate policy," he said.
There have been repeated calls for China to let the value of yuan appreciate against the US dollar. It has been accused of keeping the value of the yuan artificially low in order to help its exporters.

End Quote Timothy Geithner US Treasury Secretary

Beijing has maintained that a sudden appreciation of its currency will be detrimental not only for its export sector but for its overall economy.

Analysts say the scenario is likely to remain the same for the time being.
"China will be sensitive to discussing the yuan, especially on its own ground, but given what's happened in the world economy in the past few weeks, I think exchange rate complaints will be on the back burner," said Mitul Kotecha, global currency strategist at Credit Agricole.
Global currency China has been pushing for yuan to become a global reserve currency.
That push got a big boost as the French president Nicolas Sarkozy suggested that given the importance of emerging economies like China to global growth, their currencies should be added to the International Monetary Fund's Special Drawing Right (SDR) basket.
His comments were backed by Mr Geithner who said he supported a change to the SDR composition.
"Over time, we believe that currencies of large economies heavily used in international trade and financial transactions should become a part of the SDR basket," he said.
However, Mr Geithner said that for that to happen, the countries will have to loosen their control on the currency.
"To achieve this objective, the concerned countries should have flexible exchange rate systems, independent central banks and permit the free movement of capital flows," he said.