Published on Thu, Jul 29, 2010 at 08:14 | Source : Reuters
Updated at Thu, Jul 29, 2010 at 10:33
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IMF split in China yuan exchange rate debate
The IMF has softened its criticism of China's currency regime in recognition of Beijing's efforts to free up its exchange rate but the move showed a split among the Fund's member countries.
The IMF said the scrapping of the dollar peg would increase the central bank's flexibility to tighten monetary conditions.
A stronger yuan rate would also be good for the rebalancing of the domestic and global economies by shifting China's growth from exports and investment to private consumption, it said.
On other issues, the board supported a gradual phase-out of China's massive fiscal stimulus in 2011, provided the current trajectory for the economy is maintained. The IMF expects continued robust growth with benign inflation.
Directors commended China's plan to slow the pace of money growth this year but urged it to raise interest rates.
