News Release: United States Promotes Market-Determined Exchange Rates at World Trade Organization Forum
Mar 27, 2012
The following news release about market-determined exchange rates was issued by the U.S. Department of the Treasury on March 27, 2012:
United States Promotes Market-Determined Exchange Rates at World Trade Organization Forum
WASHINGTON – Deputy U.S. Trade Representative Michael Punke and Treasury Deputy Assistant Secretary for International Monetary and Financial Policy Mark Sobel today began a two-day series of meetings at the World Trade Organization’s (WTO) seminar on the relationship between exchange rates and trade, where they will advocate for market-determined exchange rates as a foundation of an open global trading system.
U.S. participation in the WTO seminar is premised on the importance of trade liberalization and recognition that persistently misaligned exchange rates and competitive devaluations undercut an open trading system.
Ambassador Punke stated: “Expanding international trade is critical to a vibrant global economy, a reduction in poverty, employment growth, and rising incomes. The work of the WTO is vital in promoting trade through rules that open markets and a dispute system that gives teeth to those rules. The success of the WTO was evident during the most recent global crisis when countries largely resisted pressures to enact protectionist measures. This seminar reminds us of the importance of exchange rates in the global trading system. Real exchange rates that are aligned with fundamentals are a necessary foundation for the global trading system.”
Treasury Deputy Assistant Secretary Mark Sobel stated: “A strong consensus now exists on the importance of promoting market-determined exchange rate systems, enhancing flexibility to reflect underlying economic fundamentals, avoiding persistent exchange rate misalignments and refraining from competitive currency devaluation. Exchange rate management and policies need to allow real exchange rates to better reflect fundamentals. This in turn will facilitate balanced international trade and give countries greater independence in pursuing domestic policy objectives. When trading partners believe others are allowing their exchange rates to adjust in line with fundamentals, there is less pressure for protectionism and more support for trade liberalization. The IMF has a core mandate to exercise rigorous surveillance over its members’ exchange rate policies and it must carry out this vital core mission.”
Ambassador Punke and Deputy Assistant Secretary Sobel agreed: “Strong IMF and WTO collaboration is important for the global economic and trading system.”
The seminar is taking place on March 27-28 in Geneva, Switzerland.