IMF warns against currency interventions to improve trade balance
WASHINGTON (Reuters) – The International Monetary Fund on Wednesday warned against governments trying to weaken their currencies through monetary easing or market interventions, arguing in a blog post that this would hurt the functioning of the international monetary system and make all nations worse off.
The post, which comes as global central bankers are gathering this week in Jackson Hole, Wyoming, said that policy proposals to use monetary easing and direct purchases of other countries’ currencies are unlikely to work.
“One should not put too much stock in the view that easing monetary policy can weaken a country’s currency enough to bring a lasting improvement in its trade balance through expenditure switching. Monetary policy alone is unlikely to induce the large and persistent devaluations that are needed to bring that result,” IMF chief economist Gita Gopinath and IMF researchers Gustavo Adler and Luis Cubeddu said in the post.
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Source : Reuters Link