Beijing: China should speed up appreciation of its currency, the yuan, to address its own economic challenges and help global stability, the head of the International Monetary Fund said Friday.
“On exchange rate policy, we welcome the authorities’ objective of allowing greater flexibility over time,” IMF Managing Director Dominique Strauss-Kahn said in a statement issued at the end of a visit to China.
“However, we encourage a faster pace of appreciation that would be helpful for addressing China’s key economic challenges and would also contribute to preserving global economic stability.”
China moved the yuan away from a pegged exchange rate to the US dollar in July 2005, and has since allowed its currency to strengthen by about 15%.
Especially in recent months, observers have noted that the speed at which the currency has risen in value against the US unit has picked up.
“The figures we have show that for a rather high number of months now, the real exchange rate is moving in a good direction,” Strauss-Kahn told a briefing in the Chinese capital, a day after meeting Premier Wen Jiabao.
Despite this development, overseas pressure on China to allow even faster appreciation has been maintained.
David McCormick, US Treasury under secretary for international affairs, late last month praised China’s efforts to allow its yuan to appreciate to better reflect the strength of its economy, but said it was not moving fast enough.
China is widely criticised for allegedly allowing its currency to remain at an artificially low level, giving its exporters an unfair advantage and contributing to massive trade surpluses with the US and European economies.