Asian currency manipulation comes under fire
By Alan Beattie in Dubai
Published: September 18 2003 21:01 | Last Updated: September 18 2003 21:01
Asian intervention to hold currencies down is helping to push the world economic recovery off balance and risks creating instability in coming years, says the International Monetary Fund. (来源：英语杂志 http://www.EnglishCN.com)
Presenting its twice-yearly world economic outlook on Thursday, Kenneth Rogoff, the IMF's chief economist, said that while the recovery was gathering pace, it was still dangerously dependent on US domestic demand, driving the US current account deficit up to unsustainable levels.
Exchange-rate manipulation in Asia is likely to be a focus in the IMF/World Bank meetings that begin tomorrow, with US and European policymakers promising to raise the issue despite Chinese intransigence.
In the outlook, the IMF revised global growth slightly upwards from an early version leaked late last month, predicting 4.1 per cent growth next year. The forecast for US growth was revised up 0.2 percentage points to 2.6 per cent growth this year and 3.9 per cent next.
But Mr Rogoff, who leaves the fund at the end of the month, said the large and growing US current account deficit would at some point provoke a sharp decline in the dollar. He stressed that this was a problem that would probably come to a head in two to five years from now, but warned that a correction at some point was inevitable.
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"If the euro has to bear the lion's share of the adjustment in the dollar, that is going to create a lot more difficulties than if all the Asian currencies also allow themselves to appreciate significantly against the dollar," he said. "It is bad enough that the global economy has been flying on one engine but it is going to be a lot worse if it has to land on one wheel."
China's central bank governor on Thursday continued to rule out any rapid change to the country's exchange rate regime, but stressed that the government was watching the situation closely.
The IMF argues that Asian governments, several of which have built up huge dollar reserves intervening to weaken their own currencies, should allow more flexibility in their exchange rates. Its warnings have been given added urgency by the lopsided global economic recovery, which has driven the US current account deficit higher.
The IMF projects the US deficit to remain above the historically high level of 4 per cent of gross domestic product until 2008.
Japan has also been intervening heavily, spending $75bn in the first seven months of the year to prevent the yen rising against the dollar.
On Thursday the dollar fell below Y115 for the first time since February 2001, as traders bet that the Japanese authorities might refrain from intervening to head off criticism at this weekend's meetings. The Y115 level had often been regarded by traders as a level below which the Japanese authorities would not allow it to fall.
Additional reporting by Alexandra Harney in Hong Kong and Jennifer Hughes in London