IMF wants more flexible yuan

WASHINGTON (Reuters) — China should adopt a more flexible exchange rate system while its economy is strong — a move that would give Beijing more policy tools and improve Asia’s currency flexibility, the International Monetary Fund’s Asia director said on Sunday.

David Burton said the IMF believed that despite Chinese fears its currency would rise in value, hurting exports and employment as a result, freeing the renminbi would be ‘desirable’.

‘In the short run, given the sort of pressures on the renminbi, it certainly would mean it would appreciate, but we think that flexibility is the right thing for China,’ Burton told Reuters.

He said the timing and nature of any Chinese currency move was hard to predict and ‘something that has to be decided at a very high level politically in China.’ But he also said ‘many conditions are quite favorable’ for moving now.

‘It’s always best to do these things from a position of strength — that’s one of the lessons from international experience,’ Burton said in an interview on the sidelines of the IMF and World Bank spring meetings of financial leaders.

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