IMF mem­bers pledge to re­frain from us­ing cur­ren­cies as trade weapon

Times of Oman - - MARKET -

NUSA DUA, In­done­sia: The In­ter­na­tional Mone­tary Fund (IMF) said on Satur­day its mem­bers pledged to re­frain from com­pet­i­tive cur­rency de­val­u­a­tions and step up di­a­logue on trade, as es­ca­lat­ing trade fric­tions and higher bor­row­ing costs threat­ened to knock global growth.

The agree­ment came as US Trea­sury Sec­re­tary Steve Mnuchin re­it­er­ated his con­cern over the yuan’s weak­en­ing against the dol­lar — a drop that Wash­ing­ton sus­pects may be aimed at giv­ing Chi­nese ex­ports a trade ad­van­tage and off­set­ting US tar­iffs.

In a com­mu­nique is­sued by the IMF’s steer­ing com­mit­tee, the mem­ber coun­tries also agreed to de­bate ways to im­prove the World Trade Or­gan­i­sa­tion (WTO) so it can bet­ter ad­dress trade dis­putes.

“We ac­knowl­edge that free, fair, and mu­tu­ally ben­e­fi­cial goods and ser­vices trade and in­vest­ment are key en­gines for growth and job cre­ation,” the In­ter­na­tional Mone­tary and Fi­nan­cial Com­mit­tee (IMFC) said in the state­ment.

“We will re­frain from com­pet­i­tive de­val­u­a­tions and will not tar­get our ex­change rates for com­pet­i­tive pur­poses,” it added.

Fears that es­ca­lat­ing global trade ten­sions and ris­ing US in­ter­est rates could dent growth have roiled global mar­kets in re­cent days and prompted warn­ings of height­ened risks by fi­nance lead­ers gath­er­ing for the IMF and World Bank an­nual meet­ings in the In­done­sian re­sort is­land of Bali. “The re­cov­ery is in­creas­ingly un­even, and some pre­vi­ously iden­ti­fied risks have par­tially ma­te­ri­alised,” the com­mu­nique said, re­fer­ring to threat­ened tar­iffs.

The United States and China have slapped tit-for-tat tar­iffs on hun­dreds of bil­lions of dol­lars of each other’s goods over the past few months, sparked by US Pres­i­dent Don­ald Trump’s de­mands for sweep­ing changes to China’s in­tel­lec­tual prop­erty, in­dus­trial sub­sidy and trade poli­cies. The bi­lat­eral ten­sions have flared over to cur­ren­cies with the United States voic­ing con­cern about a weak­en­ing of the yuan to close to 7 to the dol­lar in re­cent months, a level not seen in a decade.

Trump has fre­quently ac­cused China of cheap­en­ing its cur­rency to gain a trade ad­van­tage, claims Bei­jing has con­sis­tently re­jected.

Mnuchin on Satur­day said Chi­nese of­fi­cials told him at the Bali meet­ings this week that a fur­ther de­pre­ci­a­tion of China’s yuan cur­rency was not in the coun­try’s in­ter­ests.

“And as I’ve said, the cur­rency is­sue is an im­por­tant is­sue for us in trade and will be part of our trade dis­cus­sions,” he told a news con­fer­ence. “We want to make sure that de­pre­ci­a­tion is not be­ing used for com­pet­i­tive pur­poses in trade.”

Full story @ time­so­fo­man.com/busi­ness

PHOTO-OP TIME: Ar­gentina’s Fi­nance Min­is­ter Ni­co­las Du­jovne, (left) Ja­pan’s Fi­nance Min­is­ter Taro Aso (cen­tre) and US Sec­re­tary of Trea­sury Steven Mnuchin (right) ap­plaud dur­ing a group photo ses­sion with Cen­tral Bank gov­er­nors and fi­nance min­is­ters at the In­ter­na­tional Mone­tary FundWorld Bank Group An­nual Meet­ing 2018 in Nusa Dua, Bali, In­done­sia, on Satur­day. - Reuters

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