IMF split in China yuan exchange rate debate

RELATED NEWS China yuan 'substantially undervalued': IMF official IMF gives ground on yuan exchange rate debate China yuan undervalued by between 5 to 27%

Beijing dropped the yuan's 23-month-old peg to the dollar and reverted to a managed float on June 19, since which time it has inched up 0.7% against the dollar.

Prasad said it was premature for some countries to argue China had made a significant move on its currency regime and was boosting local demand to help rebalance the world economy.

Despite the choice of language used by the IMF's board, the Fund's mission chief to China, Nigel Chalk, said Fund staff economists found the renminbi remained "substantially below the level that is consistent with medium-term fundamentals."

That view was based on staff forecasts that China's current account surplus, which has fallen to around 4% of gross domestic product, will rise to about 8% in five years as the world economy recovers and net exports pick up again.

Beijing disagreed, arguing the surplus will stay at the new, lower level, Chalk told reporters on a conference call.

Among the constraints in assessing China's economy was the lack of a medium-term policy framework, he said.