Plus   Neg

IMF: Currency Devaluations Due To Policy Easing Cannot Improve Trade Balance


The International Monetary Fund cautioned that monetary policy easing are unlikely to lead to currency devaluations that are adequate enough to cause a sustained improvement in a country's trade balance.

"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," IMF Chief Economist Gita Gopinath and researchers Gustavo Adler and Luis Cubeddu said on Wednesday in a blog post on the institution's website.

"Monetary policy alone is unlikely to induce the large and persistent devaluations that are needed to bring that result," they added.

The IMF view comes at a time when the US President Donald Trump has accused China and the European Union of engaging in currency manipulation to benefit their exporters.

Trade wars and currency devaluation concerns are set to be intensively discussed later this week when global central bankers will gather in Jackson Hole, Wyoming.

For comments and feedback contact: editorial@rttnews.com

Business News

Follow RTT