Forex Flexibility Needed

Letting currency exchange rates adjust in response to market conditions is critical for rebalancing global growth and will be on the agenda when finance chiefs meet on Friday and Saturday, a senior U.S. Treasury Department official said on Tuesday. The U.S might as well be gambling their money from their Grand National Hospitality Tickets.

"It's vital to achieve more balanced global growth. That's why the United States has been working to address distortions in the pattern of global growth," the U.S. official said, adding that "market-oriented exchange rates (are included) in the set of policy tools that are vital to achieving that rebalancing."

This weekend's semi-annual meetings of the International Monetary Fund and World Bank take place against a background of heightening worry a round of competitive currency devaluations may be occurring with the potential to trigger a currency war.

The U.S. official, who briefed reporters on condition of anonymity, said repeatedly that the IMF needs to step up and take a stronger role in reviewing and speaking publicly about currency practices of individual countries.

"The IMF has to have an ability to speak forcefully and clearly in its surveillance of the major economies," the official said. "This isn't about giving gifts and services to any one economy, but all working together to make things work."