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IMF chief sets in with China

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HB PARIS / MOSCOW / TOKYO. IMF chief Dominique Strauss-Kahn attacked China in currency dispute. Should the People’s Republic does not revalue its currency more, it could cause a new crisis, Strauss-Kahn, the French newspaper Le Monde on Thursday. "The undervaluation of the yuan, the source of tensions in the world economy, which is about to become a threat." The conflict should determine the meeting beginning on Friday of finance ministers of the seven leading industrial nations (G7) at the annual meeting of the International Monetary Fund.

Most recently, even according to warnings of a currency war between developed and emerging markets. The U.S. and EU accuse China Commission to keep the exchange rate of the yuan artificially low, in order to gain unfair advantages in foreign trade.

The director of the trade-oriented Institute for Macroeconomics and Economic Research (IMK), Gustav Horn, took the party to the dispute for the U.S. and also expressed sharp criticism of China. The devaluation of the dollar help the U.S. trade balance their deficit to fix it. "This is also the world’s economic stability," said Horn Trade Journal Online. "This includes, then upgrade to the faster growing countries such as the emerging markets," he said. The problem of world economic rationale for this, however, that China, this appreciation escapes. "Here’s the problem, and not in the U.S.."

EU Trade Commissioner Karel De Gucht on Thursday struck again in this notch, said at the same time, however, question any aggressive action against the People’s Republic. "The Chinese will not revalue its currency to external pressures," he told reporters.

Another theme of the G7 meeting likely to be interventions in the foreign exchange markets. Here differences between the IMF and World Bank were clear. World Bank President Robert Zoellick in an interview, avoided any criticism of Japan and other countries that have been active in recent weeks in the foreign exchange market to drive down the price of their currencies. "Neither do I agree with them nor do I criticize them," Zoellick told the Japanese newspaper Nikkei.

The Deputy IMF Managing Director Naoyuki Shinohara made clear, however, that he opposes permanent intervention in the market strictly. "It is absolutely not desirable for a country to intervene constantly to keep currencies at a certain level," he said. The IMF warned Japan against further interference Vice: "This will distort markets."

Japan had made billions in September bought dollars after the yen rose to a 15-year high of U.S. currency. The high price charged Japan’s export economy. In addition, Brazil had tried to push the local currency Real.

Given the rapidly growing emerging economy, the tax rate for foreign capital inflows have doubled. Zoellick said is true also for an appreciation of Chinese currency. But this will not solve all the problems, the World Bank chief stressed.

Signals of relaxation came before the G7 meeting of finance ministers from Japan and South Korea. Japan’s Prime Minister Naoto Kan reiterated while the readiness of his government, against the yen soaring again intervene in the foreign exchange market. He also said, however, the will to cooperate on monetary issues in the G7 group. South Korean President Lee Myung Bak told, should at the meeting of 20 leading industrial and emerging countries (G20) in November to speak in exchange rate issues also have a vote. South Korea is hosting the next G-20 summit.