US Treasury Secretary Timothy F Geithner said the world’s major economies need greater flexibility in exchange rates to avoid economic disruptions.
A few emerging-market nations are running “tightly managed currency regimes” by using capital controls and accumulating excess reserves, Geithner said on Saturday in a statement for the International Monetary Fund’s steering committee. The controls put pressure on countries with market-driven exchange rates and fuel inflation in the countries whose currencies are undervalued, he said.
Geithner’s comments, while not identifying China, are part of the US’s efforts to get the country to allow the yuan to rise further. The Group of 20 nations, including the US and China, agreed yesterday to set up a process for identifying and addressing economic imbalances.
Meanwhile, Congressional Republicans have assured President Barack Obama that they would not hold the economy hostage over raising the debt ceiling, Treasury Secretary Timothy Geithner said on Sunday.
But Republicans appearing on television news shows insisted they would not support an increase of the $14.3 trillion borrowing limit without an accompanying deal to rein in future deficits.