conference IMF meets amid threat of currency war

IMF meets amid threat of currency war


WASHINGTON (AFP) – The specter of a damaging global currency war is set to dominate a meeting of economic powers in Washington Friday, amid bleak hopes for a deal between China, the United States and other powers.
Finance ministers and central bankers from 187 countries will convene for an annual meeting of the International Monetary Fund amid warnings that beggar-thy-neighbor policies could wreck the global recovery.
With the recovery still painfully slow, recent weeks have seen a range of countries from Japan to Colombia intervene to stop their currencies from rising to levels that would make exports prohibitively expensive.
But the summit is set to be dominated by a long running and increasingly antagonistic dispute between the United States and Beijing -- whose weak yuan policies are accused of slowing the global recovery and hurting American jobs.
While the US Congress moves toward slapping retaliatory sanctions on Chinese goods, Washington has ratcheted up the pressure by hinting that China may not be allowed a bigger say at the IMF unless the currency issue is resolved.
US officials are adamant that the IMF meetings should address the need for "market oriented exchange rates" and a fundamental "rebalancing" of the global economy.
On the eve of the meeting IMF chief Dominique Strauss-Kahn said there was no "formal" link between the two issues, but the United States was "right" to call for reform.
"I think it is right to insist on the fact that the more an emerging country will have a voice and representation in the fund, the more they have a responsibility in the stability of the system."
"You can be at the center of the system, or you can be at the border of the system. But if you want to be at the center of the system... it goes with having more responsibility."
China has rebuffed pressure to lift the value of the yuan, fearing it would put Chinese businesses at risk.
Meanwhile European officials said a rapidly rising euro, victimized by an undervalued US dollar and Chinese yuan, could threaten eurozone recovery and vowed to press both Washington and Beijing to take action.
India warned that imbalances in the global economy have become "unsustainable" but called on major economies to avoid confrontation to avert a feared currency war.
On Thursday Indian Finance Minister Pranab Mukherjee, speaking ahead of a meeting of top economic policymakers in Washington, said that building an international consensus was the best way forward.
But reaching that consensus appears to be an uphill struggle.
Youssef Boutros-Ghali, who heads the International Monetary Fund's steering committee, said a quick agreement on currency exchange rates was unlikely.
When asked if action before next month's G20 summit in Seoul was feasible, Boutros-Ghali said "this late in the game, no. But in the coming three to six months, yes absolutely."
Some are pressing for quicker action. The IMF has warned that rich and emerging economies must dramatically change the way they trade with each other or risk throttling the recovery.
In its latest economic outlook, the IMF said growth would slow more than previously expected in 2011, as the United States, Europe and Japan continue to struggle and China remains overly dependent on exports.
Wading into sensitive political waters, the IMF said China must allow its currency to strengthen to boost domestic demand and reduce its reliance on exports.
"To the extent that a stronger Chinese currency eases this process, other surplus countries in the region could follow suit, which would facilitate the needed shift towards domestic sources of growth."
As part of that rebalancing IMF members are also expected to discuss how to reform decision-making at the fund, giving more say to emerging and developing economies.
Europe, seen as a major loser from the reshuffle, has been reluctant to reduce its voting share or representation on the IMF's decision-making board.
European finance ministers last week agreed to review representation at the Washington-based international lender, but attached significant conditions.
Coppied by http://news.yahoo.com/s/afp/20101008/bs_afp/imfeconomyforex

Pakistan to seek IMF help for flood-battered economy

Enjoy Pakistan to seek IMF help for flood-battered economy


A boy walks into his family house which was destroyed by floodwaters in Mehmood Kod village in Pakistan's Muzaffargarh district of Punjab province August 23, 2010. (REUTERS/Reinhard Krause)
SUKKUR, Pakistan (Reuters) - Pakistan braced for more flooding in the south as officials were due to hold talks in Washington on Monday with the International Monetary Fund on how to shore up the battered economy to maintain stability.


A boy walks into his family house which was destroyed by floodwaters in Mehmood Kod village in Pakistan's Muzaffargarh district of Punjab province August 23, 2010. (REUTERS/Reinhard Krause)
The IMF said it would review Pakistan's budget and economic prospects because of the magnitude of a disaster that has ravaged crops and infrastructure, left more than 4 million homeless and raised concerns that Islamist militants may exploit the chaos.

Estimates for economic growth this year range from zero to 3 percent -- below the official target of 4.5 percent -- with Pakistan's ally the United States worried that a weak economy could destablise a key nation in the war against militancy.

Agriculture, the mainstay of the economy, has been hit hard.

The floods have destroyed or extensively damaged crops over 4.25 million acres (1.72 mln hectares) of land -- including cotton, rice, sugarcane, maize -- Food Minister Nazar Muhammad Gondal told Reuters.

The total area under cultivation is about 23 million hectares, food ministry officials say.

The IMF talks will evaluate the economic impact of the flooding, assess the measures needed to address the damage and discuss ways in which the IMF can help. [nSGE67M04A]

Help may come in the form of lowering some of the targets of the loan programme or allowing the government to abandon it and take on another disaster-relief loan.

Either way, the government is under intense pressure to deliver assistance to a public that is seething at its handling of the crisis.

Any unrest could fuel a Taliban-led insurgency that the military had said it had made serious progress against before the floods hit three weeks ago.

(For a slideshow: Pakistan flood relief, click http://in.reuters.com/news/pictures/slideshow?articleId=INRTR2GZF5)

Authorities have been accused of moving too slowly and Islamist charities, some with suspected links to militant groups, have rapidly provide relief to Pakistanis, already frustrated with their leaders' track record on security, poverty and chronic power shortages.

Since the floods struck, the Taliban had not staged any major attacks, but on Monday a suicide bomber killed pro-government cleric Noor Mohammad and 21 others in a mosque in South Waziristan on Monday, officials said.

"People were leaving the mosque after prayers when the bomber moved ahead to shake hands with my father and exploded the device," said the cleric's son, Noor Khanan, adding that the bomber was a young boy.

South Waziristan, a semi-autonomous ethnic Pashtun region, was a stronghold of al Qaeda and Taliban militants before the government launched a military offensive in October last year and largely cleared the region. Taliban militants often melt away when they are under pressure and return to former bastions.

Hours earlier, a bomb blast at a meeting of tribal elders killed seven people in Kurram tribal region near Afghanistan, a government official said.

In a third attack, a bomb planted under a cart went off in a market on the outskirts of the northwestern city of Peshawar, killing three people and wounding six, police said.

SOUTH ON ALERT FOR FLOODS

The worst floods in decades have been spreading through the rice-growing belt in southern Sindh province district by district, breaking through or flowing over embankments.

International Organisation for Migration (IOM) spokesman Saleem Rehmat told reporters about 80 percent of the 3.9 million people in Sindh affected by the floods have been displaced.

Hundreds of thousands of people have fled cities, towns and villages in the province for safer ground, disaster management officials said, adding that growing water pressure in the Indus River was one of their biggest concerns.

Food is running out in remote villages. Two exhausted-looking men wading along a flooded road in Sindh in search of supplies said they had walked for three days from their flooded village.
Coppied by http://thestar.com.my/news/story.asp?file=/2010/8/24/worldupdates/2010-08-23T210427Z_01_NOOTR_RTRMDNC_0_-510133-2&sec=Worldupdates