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Mar. 18 – International Monetary Fund Managing Director Dominique Strauss-Kahn said yesterday that the Chinese yuan is undervalued.
“The renminbi is still significantly undervalued, there is a long way to go, but correct policies are in place,” Strauss-Kahn said at a conference at the European Parliament.
“In economies with persistent account surpluses, specifically China, Germany and oil-producing nations, domestic demand must increase and that the ‘massive’ buildup of reserves by some countries has put the international monetary system under strain,” the IMF chief said.
“We need the Chinese to change their (foreign exchange rate) policy, try to have less export-led growth shifting to more domestic-led growth,” he said. “That is the result we want to achieve.”
With the global economic recovery stronger than many had anticipated, the I.M.F. is forecasting global growth of 4 percent for 2010.
With the IMF wading in that might now persuade the Chinese to do something. They won’t listen to Washington as they regard it as ‘interference with China’s internal affairs”. I bet on a token revaluation, but not enough to really make much of a difference.