In the matter of the balance of payments and the exchange rate improving communication can help the passage of the transition period in China, said the head of the International Monetary Fund.
DAVOS, Jan 21. The financial authorities of China to improve communication and to talk more about policy, said the head of the International Monetary Fund (IMF) Christine Lagarde.
“Given that the activities associated with the transition period, are held almost at the same time… there is a problem of communication,” she said during the panel session at the economic forum in Davos.
“This is something that the markets don’t like uncertainty, not knowing exactly how a policy, ignorance of what will navigate the course of the yuan — will it be determined relative to the dollar, against a basket of currencies, which is this basket,” explained the head of the Fund.
According to her, the issue of the balance of payments and the exchange rate, improving communication would help the passage of the transition period. “We are confident that all difficulties can be overcome, carrying out a correct policy, and in the presence of considerable reserves and buffers that exist in the country,” she concluded.
The IMF Executive Board on November 30 decided to include the yuan in the SDR basket, including dollar, Euro, pound sterling and yen. The Fund’s decision coincided with the expectations of international analysts and experts who have long talked about the need for recognition of the role of China in global trade.
The people’s Bank of China weakened the yuan to the dollar in the first week of 2016, more than 1.5%. This was the largest change rate of the yuan from August 2015, when the devaluation of the yuan the strongest effect on global stock markets, and led to the fall of the major stock indexes of China by 5-6%. After heightened tension in the stock and financial markets the Chinese Central Bank has focused on stabilization of the yuan.