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IMF's Lagarde: China's Yuan Moderately Undervalued

04-19 12:24 Caijing
The IMF head said yuan was "moderately undervalued", echoing an earlier IMF report on the world's economic outlook.

International Monetary Fund Managing Director Christine Lagarde said China has played a crucial role in running the world's economy, with the government more focused on the quality of growth instead of quantity, according to a report by Sina.

For the Chinese currency, the IMF head said yuan was "moderately undervalued", echoing an earlier IMF report on the world's economic outlook.

The currency has appreciated by 0.9 percent against the dollar since the start of the year. According to Yi Gang, Deputy Governor of the central bank, China is considering widening the trading band of the yuan further, after it floated the band from 0.5 percent to 1 percent last year.

Lagarded praised China's efforts in restructuring its economy. Beijing is steering the world's second-biggest economy towards a right direction, said Lagarde, citing the size and growth rate of the economy, as well as a shift away from heavy reliance on investments.

She warned, meanwhile, that China should strengthen regulations in the financial sector to prevent potential risks in the non-banking financial channels from developing into disruptive bubbles.

China has in the past five years grown its non-bank financing by 40 percent as a share of total, which is good to the country's economy but also alarming, Largade said.

The Washington-based IMF lowered China's 2014 GDP growth forecast to 8 percent in its World Economic Outlook published earlier this week, in line with its weak projections on major economies.

The global economy will not gain much traction this year as Europe and Japan filed to recover, Lagarde said. The United States is in better shape, she said, but risks posed by automatic spending cuts that kicked in last month should be cautioned.

 

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