2ND LD: APEC finance chiefs paper over forex flexibility issue
May 24th, 2007
PHUKET, Thailand, Sept. 5 Kyodo
As they urged each economy to accelerate structural reform, the ministers attached importance in the joint statement to ‘’appropriate exchange rate policies that facilitate orderly and balanced external adjustment.'’
‘’Despite a weak international environment due in part to the SARS outbreak and the war in Iraq, which affected the first half of the year, we expected the region to continue its recovery with a stronger growth rate in the second half of 2003,'’ the statement said.
Finance ministers from the Asia-Pacific Economic Cooperation (APEC) forum agreed Friday to obliquely urge China and other economies to let currencies rise while admitting that a free-floating currency would not always be best for them.
‘’While recognizing that there is no single exchange rate regime that suits all economies at all times, we noted a view expressed at the meeting that more flexible exchange rate management, in some cases, would promote this objective,'’ the statement said.
On the regional economy, they welcomed stronger-than-expected growth last year and took an upbeat view on a continued recovery this year, the joint statement said.
The accord that the ministers barely managed to reach struck a delicate balance between a camp led by the United States, which pushed hard for including in the ministers’ joint statement a reference to freer exchange rates, and China and other economies with fixed exchange rate regimes.
U.S. Treasury Secretary John Snow said he was ‘’very much encouraged'’ by the outcome of the talks on the flexible exchange rate issue.
In this light, they hailed the APEC initiative to promote the development of securitization and credit guarantee markets in order to enhance the efficiency of bond markets, the joint statement said.
China manages the yuan in an 8.2760-8.2800 per dollar band, a range that has been increasingly criticized by the U.S., Japan, South Korea and Europe as undervalued and supporting its export industries.