IMF calls for flexible approach to exchange rate surveillance

WASHINGTON, April 14, 2007 (AFP) – The International Monetary Fund called Saturday for a flexible, non-coercive approach to monitoring exchange rate regimes of member countries after the United States had pressed for stepped-up intervention by the IMF.

“Dialogue and persuasion should remain key pillars of effective surveillance,” the IMF’s policy-setting committee said here in a statement after a twice-yearly meeting.

IMF action on exchange rates, the committee added, “should pay due regard to country circumstances” and be characterized by even-handedness.

Earlier in the day US Treasury Secretary Henry Paulson, in an address to the committee, re-asserted Washington’s insistence that the IMF take a more muscular approach to currency volatility.

“Let us be clear: exercising firm surveillance over members’ exchange-rate policies is the core function of the institution,” he said.

“For us, reform of the IMF’s foreign-exchange surveillance is the lynchpin on which other reforms depend, and we look forward to action in this important area very soon.”

Paulson, in language that would be repeated in the committee statement, said IMF action should be “even-handed and candid” and reflect current economic circumstances in a particular count