IMF’s La­garde warns trade, cur­rency wars could crimp growth

Business World - - The World -

NUSA DUA, Indonesia — International Mone­tary Fund (IMF) Man­ag­ing Di­rec­tor Chris­tine La­garde on Thurs­day warned coun­tries of the per­ils of a trade or a cur­rency war, say­ing they could be detri­men­tal to global growth and hurt “in­no­cent by­standers.”

Ms. La­garde urged coun­tries to “de-es­ca­late” trade fric­tions and fix global trad­ing rules, rather than aban­don them.

“We cer­tainly hope we don’t move in ei­ther di­rec­tion of a trade war or a cur­rency war. It will be detri­men­tal on both ac­counts for all par­tic­i­pants,” Ms. La­garde told a news con­fer­ence dur­ing the an­nual meet­ings of the IMF and World Bank in In­done­sian re­sort is­land of Bali. “And there would also be lots of in­no­cent by­standers.”

China and the United States have slapped tit-for-tat tar­iffs over the past few months, rat­tling fi­nan­cial mar­kets as in­vestors wor­ried the es­ca­lat­ing trade war could knock global trade and in­vest­ment.

On re­cent yuan de­clines, Ms. La­garde said they were mainly driven by the strength of the dol­lar, not­ing that it has not de­pre­ci­ated as much against a bas­ket of cur­ren­cies.

“We’re see­ing more and more coun­tries, China in­cluded, let their cur­ren­cies fluc­tu­ate,” Ms. La­garde said.

The yuan cur­rency has faced strong sell­ing pres­sure this year, los­ing over eight per­cent be­tween March and Au­gust at the height of mar­ket wor­ries, though it has since pared losses as au­thor­i­ties stepped up sup­port.

A US Trea­sury of­fi­cial on Mon­day re­peated that the Trump ad­min­is­tra­tion was con­cerned about the yua­nis re­cent weak­en­ing as the depart­ment pre­pares a semi-an­nual re­port on cur­rency ma­nip­u­la­tion due out next week.

US Pres­i­dent Don­ald Trump has ac­cused China of de­lib­er­ately ma­nip­u­lat­ing its cur­rency to gain a trade ad­van­tage, claims Bei­jing con­sis­tently re­jected.

“We have sup­ported the move of China to­ward (cur­rency) flex­i­bil­ity,” she said, adding that the IMF has en­cour­aged Chi­nese au­thor­i­ties to “go down that path.”

Ms. La­garde urged China to fol­low through on the IMF’s rec­om­men­da­tion to con­tinue mov­ing to­ward a sys­tem that al­lows the yuan to move flex­i­bly.

Ms. La­garde de­clined to com­ment on the re­cent mar­ket rout, but said US eq­ui­ties and over­all stock prices “in gen­eral have been ex­tremely high.” —

IMF Man­ag­ing Di­rec­tor Chris­tine La­garde at­tends a news con­fer­ence dur­ing International Mone­tary Fund - World Bank An­nual Meeting 2018 in Nusa Dua, Bali, Indonesia in this Oct. 11 photo.

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