G7 to repeat call for flexible Chinese FX rates

The Group of Seven economic powers meeting in London later this week is expected to repeat its call for China to adopt a more…

The Group of Seven economic powers meeting in London later this week is expected to repeat its call for China to adopt a more flexible exchange rate policy.

Sources said in recent days that this week's meeting is likely to repeat the Boca Raton currency guidelines.

That statement warned against "excess volatility" and, in a thinly veiled reference to China, said "more flexibility in exchange rates is desirable for major countries or economic areas that lack such flexibility."

"I think we can expect the same message, I don't expect any surprises," said the source.

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The official also said the time frame for China to move to a more flexible currency regime remained unclear and there had been no sign it would announce any changes at this week's talks.

Asked when he expected China might loosen its policy of pegging the yuan at around 8.28 per dollar, the source said: "We're still no clearer on the timing."

Most industrialised powers view the yuan peg rate as too weak, making China's goods extraordinarily competitive and forcing the euro zone to bear the brunt of dollar depreciation.