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IMF nations point to exchange rate, geopolitical risks

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IMF nations point to exchange rate, geopolitical risks




International Monetary and Financial Committee (IMFC) chairman Agustin Carstens speaks at a press conference after the IMFC meeting at the IMF/WB Spring Meetings in Washington, DC, on April 18, 2015. AFP Photo


The International Monetary Fund's member nations on April 18 warned of risks to the global economy from exchange rate shifts and geopolitical tensions as they took note of "moderate" global growth and "uneven prospects." 

While economies in developed countries have strengthened, some emerging nations are being hit by weaker commodity prices and exports, the IMF's steering committee noted in a communique. 

With the United States poised to hike interest rates, the panel - speaking for the Fund's 188 member nations - said moves toward "policy normalization" needed to be effectively communicated to reduce adverse impacts on other economies. 

It also said the "possibility of lower growth potential" was becoming an important global challenge, a topic the panel's chairman said was central to talks on Saturday. 

"I came out of this meeting with a sense of optimism," the chairman, Mexican Finance Minister Agustin Carstens, said. 

"The fact that a lot of the discussion basically rotated around how to increase growth ... and not only discussing risks - I think that was a very good sign." 

The spring meetings of the IMF and World Bank, which conclude on April 19, have taken place amid growing concerns cash-strapped Greece will fail to reach agreement with its European Union and IMF creditors on reforms that would unlock bailout cash and stave off default. 

At the same time, risks of a stronger dollar and low commodity prices have hit emerging markets as China's blistering economic growth has slowed. 

Low inflation remains a concern for many developed economies despite signs the European Central Bank's quantitative easing program has boosted Europe's ailing economy, and the communique called for easy monetary policies to be maintained where needed. 

"Global imbalances are reduced from previous years, but a further rebalancing of demand is still needed," the communique said. That appeared to echo U.S. concerns over Germany's huge current account surplus. 

In the United States, the central bank's moves toward a rate hike have sent the dollar soaring, and officials from nations around the globe warned of the risk of financial and economic disruptions as the path of major central banks diverge. 

Canadian Finance Minister Joe Oliver said in a statement to the IMF panel that "among the most significant downside risks (was) the potential for financial instability associated with asynchronous monetary policy in systemic economies." 

While there has been little sign at the meetings of a renewed flare-up in the "currency wars" despite a surge in the value of the dollar against the euro and yen, China's growing economic clout has overshadowed the talks. 

Beijing has touted its own development bank, a rival to the established Washington-based institutions, and is pushing to include the yuan in the IMF's currency basket to reflect its economic might. 



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IMF: Currency and geopolitical tensions threaten the global economy exchange fluctuations


  • WASHINGTON (Reuters) -
History:  April 20, 2015

Member States of the International Monetary Fund warned of the risk of fluctuations in currency exchange and geopolitical tensions on the global economy, where senses global growth «moderate» and «horizons varying prices.»

International Monetary and Financial Committee Fund Affairs said in a statement that while he is recovering economies in the developed countries, some emerging countries affected by weak commodity prices and exports.

The Commission, which represents the Member States in the International Monetary Fund and the 188 state and added that while the United States seeks to raise interest rates, there is a need to move towards effective «normalize policy» to reduce the negative effects on other economies.

Growth Challenge

She said the prospects for lower growth has become an important global challenge, an issue Committee Chairman Agustin Carstens said he was pivotal in the talks, which took place the first Saturday.

He said Carstens, a Mexican Finance Minister «I came out of this meeting and I am optimistic.

He said, most of the discussion centered on how to increase growth ... and not only risk

I think that's a very good sign. »

There was the spring meetings of the IMF and the World Bank, which concluded yesterday amid growing concern that the failure of Greece, which suffer from lack of financial liquidity to reach an agreement with its creditors the European Union and the International Monetary Fund about the necessary to get the new bailout and avoid defaulting on debt funds reforms.

At the same time, the risks posed by the power of the dollar and falling commodity prices hurt emerging markets with slowing economic growth in China.

And still low inflation a concern for many of the advanced economies, despite indications that the monetary easing of the European Central Bank program that provides support for Europe's struggling economy and called for the statement to pursue easy monetary policies if necessary.

Global Imbalances

The statement said «shrunk global imbalances for the past few years but there is still a need for further rebalancing in demand». This seems to be a reflection of concern to the United States from its huge current account surplus for Germany.

In the United States pay for the central bank's move to raise interest rates for the dollar to rise dramatically, officials warned of countries around the world, the risk of financial and economic turmoil with different other major central banks path.

Currency War

Although there are weak signs in the meetings of renewed «currency war» despite the high value of the dollar against the euro and the yen, the growing Chinese influence cast a shadow over the talks.

China and the bank has announced its new development, which will compete with institutions that take the Washington-based group that seeks to enter the yuan in the currency basket of the International Monetary Fund to reflect economic weight.

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