IMF urges cooperation to prevent 'currency war'

YALTA, Ukraine (AFP) - The IMFs managing director on Saturday urged major economies to cooperate to prevent global currency war which would risk impeding the recovery from the economic crisis. Dominique Strauss-Kahn said at an economic conference in the Crimean Black Sea resort of Yalta that a global economic recovery was underway, even if it was a very uneven recovery. But he said an unwillingness of major economies to repeat the coordination they showed in implementing measures to overcome the crisis when it broke in 2008 had emerged as a major risk to the recovery. Some economies, especially China, have been criticised for keeping their currencies low in order to promote their exports and Brazils Finance Minister Guido Mantega has said the world is seeing an international currency war. We succeeded in avoiding a bigger crisis thanks to economic coordination especially in monetary policy and in fiscal stimulus, Strauss-Kahn told reporters at the conference. But today we have another threat which is that this willingness for consensus and cooperation has decreased. And we see around the world a possibility of the beginning of a currency war. He said the economic policymakers needed to get back to talking about cooperation, discussing the value of the currencies, trying to adjust what has to be adjusted, fighting against global imbalances. He said that if they didnt, there would be a new crisis of countries trying to find domestic solutions to a global problem. In recent weeks nearly a dozen governments from Colombia to Singapore have admitted to buying up local currency in the hope of driving down the price of the currency to make exports cheaper. As well as the declining commitment to economic cooperation, Strauss-Kahn said risks to the recovery also came from unemployment and private debt.

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