Geithner renews call for China to let yuan rise

Geithner renews call for China to let yuan rise

United States Secretary Tim Geithner has reiterated his call for China to let its currency appreciate faster than other currencies during an International Monetary Fund (IMF) meeting in Washington.

Geithner said without specifically naming China that the world’s economy would slow down unless export-oriented economies would revamp their economic policies and adopt “a more flexible, market-oriented currency policy.”

China issued a stern response to Geithner’s remarks by saying that rich economies are largely responsible for the current issues experienced in the currency markets.

The United States has repeatedly complained about China’s handling of the yuan which has been not allowed to move by Chinese financial regulators that much against the dollar, and which according to the U.S., has been giving Chinese exporters an unfair advantage in the market.

Shou Xiaochuan, the governor of The People’s Bank of China, the country’s central bank, blamed the very low interest rates in rich countries for creating “stark challenges for emerging market countries.”

Developing nations have been struggling recently with the fast rise of their own currencies which have compromised their competitiveness in the global economy.

China has limited the appreciation of the yuan by purchasing more foreign currency. Letting its currency to rise much faster would help other developing economies that compete with China, aside from the U.S. which has put the greatest pressure on China.

Yet another reason for the increase in the value of the currencies of developing countries is that their economies are expanding while those of the rich nations have either stagnated or contracted.

Posted by James Fried on Sunday October 10 2010, 8:22 AM EST. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0