Skip to main content

International Business IMF director warns trade, currency wars could be detrimental for global growth

IMF managing director Christine Lagarde talks during a news conference ahead of the annual meetings of the IMF and World Bank in Bali, Indonesia, on Oct. 11, 2018.

Firdia Lisnawati/The Associated Press

International Monetary Fund (IMF) managing director Christine Lagarde on Thursday warned countries of the perils of a trade or a currency war, saying they could be detrimental to global growth and hurt “innocent bystanders.”

Ms. Lagarde urged countries to “de-escalate” trade frictions and fix global trading rules, rather than abandon them.

“We certainly hope we don’t move in either direction of a trade war or a currency war. It will be detrimental on both accounts for all participants, Ms. Lagarde told a news conference during the annual meetings of the IMF and World Bank in Indonesian resort island of Bali.

Story continues below advertisement

“And there would also be lots of innocent bystanders.”

China and the United States have slapped tit-for-tat tariffs over the past few months, rattling financial markets as investors worried the escalating trade war could knock global trade and investment.

On recent yuan declines, Mr. Lagarde said they were mainly driven by the strength of the U.S. dollar, noting that it has not depreciated as much against a basket of currencies.

“We’re seeing more and more countries, China included, let their currencies fluctuate,” Ms. Lagarde said.

The yuan currency has faced strong selling pressure this year, losing more than 8 per cent between March and August at the height of market worries, although it has since pared losses as authorities stepped up support.

A U.S. Treasury official on Monday repeated that the Trump administration was concerned about the yuan’s recent weakening as the department prepares a semi-annual report on currency manipulation due out next week.

U.S. President Donald Trump has accused China of deliberately manipulating its currency to gain a trade advantage, claims Beijing consistently rejected.

Story continues below advertisement

“We have supported the move of China toward [currency] flexibility,” she said, adding the IMF has encouraged Chinese authorities to “go down that path.”

Ms. Lagarde urged China to follow through on the IMF’s recommendation to continue moving toward a system that allows the yuan to move flexibly.

She declined to comment on the recent market rout, but said U.S. equities and overall stock prices “in general have been extremely high.”

Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter