IMF asks China to apply flexible exchange rate
International Monetary Fund (IMF) Managing Director Rodrigo Rato said that China's economy continues to gain strength and therefore it is now time for the country to move to a more flexible exchange rate mechanism. The IMF's call for a more flexible exchange rate overlaps with requests from the US and other trading partners. Several of China's trading partners have accused the country of securing an unfair advantage in foreign trade by keeping the Yuan artificially weak. The Yuan's appreciation would increase the prices of China's exports and restrict cheap Chinese goods from flooding US markets. China's cheap imports to the US play an important role in US' widening trade deficit. On the other hand, Chinese exchange rate policy official Guo Suging recently indicated that the Yuan's appreciation would provide no advantage to trading partners.