Chi­nese cur­rency de­val­u­a­tion welcome step, says IMF

The Pak Banker - - FRONT PAGE -

BEI­JING: China's new mech­a­nism for de­ter­min­ing the cen­tral par­ity of its cur­rency "ap­pears a welcome step" as it should al­low mar­ket forces to have a greater role in de­ter­min­ing the ex­change rate, the IMF said.

The global fi­nan­cial in­sti­tu­tion also as­serted that China should aim to achieve an ef­fec­tively float­ing ex­change rate sys­tem within two to three years.

China de­val­ued its tightly-con­trolled cur­rency on Tues­day by two per cent, the big­gest one-day fall since a mas­sive de­val­u­a­tion in 1994, as the world's sec­ond largest econ­omy grap­pled with eco­nomic slow­down and dwin­dling ex­ports.

The "new mech­a­nism" for de­ter­min­ing the cen­tral par­ity of the Ren­minbi an­nounced by China "ap­pears a welcome step" as it should al­low mar­ket forces to have a greater role in de­ter­min­ing the ex­change rate, an IMF spokesper­son said.

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