IMF warns governments against currency interventions aimed at improving trade balance

Date of edit:: 2019/8/21 18:22

The International Monetary Fund warned on Wednesday against governments seeking to weaken their currencies through monetary easing or market intervention, saying it would damage the functioning of the global monetary system and cause suffering to all countries.

The IMF said in a post on its blog, which comes as bankers from global central banks prepare to meet this week in Jackson Hole, Wyoming, that policy proposals for the use of monetary easing and direct purchases of currencies of other countries are unlikely to be effective.

“ One should not strongly believe in the view that easing monetary policy can weaken a country’s currency enough to achieve a continuous improvement in its trade balance through a diversion in spending, ” said Gita Gopinath, chief economist at the IMF and IMF researchers Gustavo Adler and Luis Copedo. Monetary policy alone is unlikely to produce significant and sustained reductions in the value needed to achieve that result. ”

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