The executive board of IMF has shown confidence in its newly-appointed managing director Christine Lagarde that she will effectively carry out her duties despite a French embezzlement probe against her.
"The Board is confident that she will be able to effectively carry out her duties as Managing Director," it said in a statement, but refrained from making any comment on the French court order.
A French court ordered an investigation into Lagarde's role as Finance Minister in a much-criticised $400 million arbitration deal in favour of a controversial tycoon.
"In regard to Ms.Lagarde, the executive board prior to its selection of the new managing director discussed the case in France. It would not be appropriate for the Board to comment on a case that is currently before the French judiciary," the International Monetary Fund Board said.
Lagarde, 55, last month became the IMF MD, replacing Dominique Strauss-Kahn who resigned following his arrest in May on allegation of rape of a New York hotel maid.
Lagarde is accused of wrongly pressing a bank to enter binding arbitration over a dispute with a businessman who supported President Nicolas Sarkozy's election campaign.
Prosecutors say Lagarde abused her authority by approving a 285 million euros ($406 million) payment to businessman Bernard Tapie, a former left-wing minister who switched sides to support Sarkozy in the 2007 presidential election.
Lagarde has denied any wrongdoing in the case. Her lawyer Yves Repiquet said the court's decision would not affect her work.
"This procedure is in no way incompatible with the current functions of the managing director of the IMF," he said.
Repiquet described the inquiry as "suspicion abusively cast on Christine Lagarde by a handful of opposition members of parliament for political ends."