US: Progress in currency dispute as China's yuan strengthens

Oct 15, 2010, 22:03 GMT

Washington - US Treasury Secretary Timothy Geithner said Friday that China has made progress in recent weeks in easing its undervalued currency, which has increasingly become an irritation in China's trade relations with the US and other Western economies.

In a statement, Geithner 'recognized China's actions since early September to accelerate the pace of currency appreciation, while noting it is important to sustain this course.'

The recognition was part of his announcement that Friday's scheduled report by the Treasury Department to the US Congress on international economic and exchange rate policies was postponed until after a meeting of the leaders of the Group of 20 countries next month.

'These meetings provide an opportunity to make additional progress on the important challenge of securing stronger and more balanced growth,' Geithner said.

He noted that the Chinese currency has gained about 3 per cent in value since June, when Beijing said that it would allow exchange rates to respond to market forces.

'The pace of appreciation has accelerated (since September 2) to a rate of more than 1 per cent per month,' Geithner said. 'If sustained over time, this would help correct what the (International Monetary Fund) has concluded is a significantly undervalued currency.'

He said that all major economies need to help bring the global economy into better balance.

'By continuing to implement reforms to strengthen domestic demand and by allowing the exchange rate to move higher to reflect fundamental economic forces, China will make a significant positive contribution to the global rebalancing effort, help reduce pressure on those emerging market economies that have more flexible exchange rates, and provide a more level playing field for trading partners around the world,' Geithner said.

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