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IMF softens stance on China's currency
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06/08/12 11:44 AM ET
The International Monetary Fund on Friday said that China’s currency is no longer “substantially undervalued.”
The IMF now says the yuan is only “moderately undervalued.”
First Deputy Managing Director David Lipton told reporters in Beijing that the IMF shift was based on the fact China’s current account surplus had declined from 10 percent of GDP in 2007 to less than 3 percent of GDP in 2011.
“This suggests that the undervaluation of the currency has been reduced,” Lipton said.
Last October, the Senate passed a bill by a 63-35 vote that would authorize duties on imports from countries found to be manipulating their currencies. It was sponsored by Sens. Charles Schumer (D-N.Y.), Lindsey Graham (R-S.C.), Sherrod Brown (D-Ohio), and Olympia Snowe (R-Maine).
The IMF now says the yuan is only “moderately undervalued.”
First Deputy Managing Director David Lipton told reporters in Beijing that the IMF shift was based on the fact China’s current account surplus had declined from 10 percent of GDP in 2007 to less than 3 percent of GDP in 2011.
“This suggests that the undervaluation of the currency has been reduced,” Lipton said.
The move is likely to anger congressional critics who continue to argue that China is manipulating its yuan to make its exports cheaper here and to make U.S. products more expensive in China.
The House has refused to take up the measure and the White House last month once again declined to name China a currency manipulator.
GOP presidential candidate Mitt Romney, however, has vowed to name China a currency manipulator, a designation that would spark negotiations with China.
The IMF shift came as the fund predicted that China’s economy, the world’s second largest, would slow this year to having 8 percent growth rather than 9.2 percent. Lipton praise China for lowering a key interest rate on Thursday in order to spark more robust growth.
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