World growth slows on credit crunch
Updated: 2007-10-17 23:00
US Dollar Overvalued
The IMF repeated its view that the US dollar was overvalued, despite recent declines to record lows, and needed to depreciate further. It also said the yen was undervalued, considering medium-term fundamentals.
"In the IMF staff's view, the dollar remains overvalued relative to medium-term fundamentals," the IMF said.
It said the euro, which has recently chalked record highs against the dollar in recent weeks, continued to trade in a range broadly consistent with medium-term fundamentals.
The euro's strength has prompted anguished calls from some European politicians for US action to strengthen its currency, but the IMF said the euro did not look particularly expensive.
The fund said the Canadian dollar, which also has strengthened, was in line with fundamentals, but the British pound was overvalued.
The IMF repeated that more flexibility in China's currency was needed to help unwind global financial imbalances and boost domestic consumption.
The Chinese yuan has gained a further 7.8 percent against the dollar since it was revalued by 2.1 percent in July 2005 and cut free from a dollar peg to float within tightly managed bands.
But the United States and other trade partners say the currency remains far too cheap, given China's record $1.434 trillion stockpile of foreign exchange reserves.
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