IMF sees no sign of yuan manipulation

The International Monetary Fund has not been asked to conduct a special consultation with China over how it manages its foreign- exchange-rate regime, IMF managing director Rodrigo Rato said yesterday.

"We have not been asked," he said at a news briefing.

The IMF had no evidence at this time of currency manipulation by China, Mr Rato said. Nevertheless he urged China to make full use of the currency flexibility within its managed float regime.

Asked whether China was moving too slowly in this respect, he said: "We are insisting that they take full advantage of the flexibility ... it is clear that we see room for more market-driven value for their currency than we have now. But do not underestimate their ability to increase domestic consumption," Mr Rato said.

In a report released on Thursday, it was revealed that the IMF urged China to adopt a phased approach to more currency flexibility in a July assessment, just weeks before Beijing revalued the yuan.

The report is the first glimpse of annual IMF staff discussions with Beijing prior to China's July 21 revaluation of the yuan.

The report said Beijing agreed with much of the IMF staff's assessment, but noted that growing protectionism against Chinese exports and increased international pressure for more flexibility of the yuan had complicated decision-making.

Yesterday, US Deputy Treasury Secretary Robert Kimmitt was quoted as saying the US would like to see China move more quickly towards a market-based currency regime.

"We are worried and would like to see the Chinese orient their currency more quickly to the market," said Mr Kimmitt, according to the summary of an interview released by Germany's Handelsblatt newspaper.

On Thursday, Frank Vargo, vice-president for international economic affairs at the National Association of Manufacturers, said the US Treasury needs to formally label China a currency manipulator before it can expect the IMF to take a tougher line on Beijing.

"The first step is to have Treasury cite them," said Mr Vargo.

The Wall Street Journal reported that the Bush administration decided against labelling China a currency manipulator in a semi-annual report likely to be released after President George W. Bush  returns next week from his China  visit.