Fin24

No risk of currency war: Geithner

2010-10-13 10:59

Washington - There is "no risk" of a global currency war erupting, despite recent currency interventions by nations ranging from Japan to Colombia, US Treasury Secretary Timothy Geithner said on Tuesday.

Geithner acknowledged in an interview on "The Charlie Rose Show" broadcast on Bloomberg TV that Brazil has made reference to the possibility, but he brushed aside fears.

"They used that phrase," Geithner said. However "there is no risk of that." Geithner's comments came despite a failure this weekend by the world's top finance officials meeting in Washington to reach a consensus on measures that could head off a potential currency battle.

In a statement, the International Monetary and Financial Committee - the policy arm of the IMF - on Saturday stopped short of any specific call on China or others to change policies of using a low currency and accumulation of reserves to boost exports.

The International Monetary Fund steering committee, which has been struggling to address friction among key economies including China and the United States, noted "tensions and vulnerabilities" due to "widening global imbalances" but said the organisation should continue to study the situation

Geithner on Saturday said the IMF "must strengthen its surveillance of exchange rate policies and reserve accumulation practices," adding that "excess reserve accumulation on a global scale is leading to serious distortions in the international monetary and financial system."

Recent IMF figures showed Beijing had currency reserves of $2.447 trillion, the largest in the world and nearly 30%of the global total.

Washington maintains that China purchases large amounts of dollars to keep the yuan artificially low, which distorts global trade by boosting Chinese exports.