[ad_1]
NUSA DUA, Indonesia (Reuters) – The United States has sought to make currency a central element of any solution to a heated trade dispute with China, by keeping pressure on Beijing to accelerate economic reforms. a rally of policymakers who are committed to doing more to preserve global growth.
IMF Managing Director Christine Lagarde (FC), Central Bank Governors and Finance Ministers pose for a group photo at the International Monetary Fund – World Bank Group Annual Meeting in Nusa Dua, Bali, Indonesia October 13, 2018. REUTERS / Johannes P. Christo
Chinese central bank governor Yi Gang vowed on Saturday to maintain the value of the yuan in "broadly stable" currency at the annual meetings of the International Monetary Fund and the World Bank in Bali, where the IMF tried to push the two world's largest economies to settle their differences.
The statement of the Governor of the People's Bank of China to the IMF Executive Committee urged Fund members to avoid competitive devaluations of the currency.
"China will continue to let the market play a decisive role in the formation of the RMB exchange rate," Yi said in a statement. "We will not engage in a competitive devaluation and will not use the exchange rate as a tool to deal with trade friction."
A statement issued Saturday by IMF member countries – following a new turmoil on the financial markets – also sought to appease nervous investors by promising to intensify their dialogue on trade issues.
US Treasury Secretary Steven Mnuchin said Saturday that Chinese officials had told him that a further depreciation of the yuan was not in China's interest. He told Reuters in an interview Friday that monetary issues should be part of trade talks between the United States and China.
"We want to make sure that the depreciation (in yuan) is not used for competitive purposes in trade," Mnuchin told reporters Saturday.
The yuan [CNY=CFXS] has fallen more than 8% against the dollar since the end of April at around 6.91 on Friday, which is close to the psychologically important level of 7.0 unmatched for a decade.
In the communiqué of the International Monetary and Financial Committee, the Fund's member countries also agreed to discuss ways to improve the World Trade Organization so that it can better resolve trade disputes.
"We recognize that trade and investment in goods and services, free, fair and mutually beneficial, are essential engines of growth and job creation," the IMFC said in its statement.
"We will refrain from competitive devaluations and will not target our exchange rates for competitive purposes," he added.
HIKING RATE
On Thursday, IMF Managing Director Christine Lagarde urged members to "defuse" trade tensions and work to set the rules for global trade. She also warned against adding currency into the trade dispute, saying it could hurt global growth as well as "innocent" countries, especially emerging markets that provide commodities to the world. China. She urged.
Some of these countries, including Indonesia, host of IMF and World Bank meetings, are already struggling to contain capital outflows caused by rising US interest rates.
Fears of a sharp rise in rates – and international trade tensions – have led to a massive sell-off in global stock markets over the past week.
The governor of the European Central Bank, Mario Draghi, warned on Saturday that a "decline" in rates and a sharp revision of asset prices were the main risks for the economic outlook.
US Federal Reserve Vice President Randal Quarles said the US central bank is looking at the effect of its equities on emerging markets, but that the Fed's priority is to define an appropriate internal monetary policy.
"It is in the interest of no one in the world (…) that we are holding back the curve in the United States by moderating what we think is the right direction for domestic politics," Quarles said in a statement. Bali Finance Conference.
Blaming the Sino-US trade dispute and tightening financial conditions in emerging markets, the IMF this week reduced global growth forecasts for 2018 and 2019.
"The recovery is increasingly uneven and some previously identified risks have partially materialized," the IMFC statement said, referring to the tariff threat and the pressure exerted by the outflows.
The United States and China have imposed exorbitant tariffs on hundreds of billions of dollars of reciprocal merchandise in recent months, following US President Donald Trump's demands for radical changes in intellectual property, industrial subsidies and China's trade policies.
Trump has frequently accused China of lowering the price of its currency for a commercial advantage, Beijing said repeatedly. The US Treasury must issue a key report on currency manipulation next week.
Some analysts have assured the Chinese central bank that the weakness of the yuan will persist, even if the central bank reassures him, lack of a clear solution for the settlement of the trade dispute between the United States and China and an increase in tariffs in January .
"Customers in China are not willing to bring down the yuan," said Mansoor Mohi-uddin, head of foreign exchange strategy at NatWest Markets, in a research note. "This in turn makes us cautious about calling for a spike in the global dollar."
Federal Reserve Rate Rising Should Strengthen Dollar Strength and Increase Pressures on Capital Exits for Emerging Market Economies
But Bank of Japan Governor Haruhiko Kuroda said the Fed's rate hikes were "fundamentally good" for the global economy, although he is more cautious about the Fed. escalating trade tensions due to its "rather unusual" magnitude.
Additional reports by Leika Kihara, Edward Davies, Sumeet Chatterjee, Franceso Canepa and Jan Strupczewski in NUSA DUA; Edited by Shri Navaratnam
