IMF weighs advice on exchange rate work

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The IMF has already begun to make changes to its framework for exchange rate surveillance that are in line with several of the recommendations in the latest report from the IMF's Independent Evaluation Office (IEO) on exchange rate policy advice, according to IMF Managing Director Rodrigo de Rato.

These initiatives include strengthening analytical tools for exchange rate analysis, better integrating financial sector analysis into IMF surveillance, and tackling issues of global importance through multilateral consultations involving the major players in the global economy, de Rato said. The IMF is also seeking to clarify the parameters of its surveillance mandate through an update of the so-called 1977 Decision on Surveillance over Exchange Rate Policies.

While de Rato welcomed the report as a timely contribution to the debate about how to improve the IMF's work on exchange rates, he also noted that it had certain limitations. "The IEO report contains a great deal of valuable information," he said. "However, because the report does not address the specific initiatives in this area that have been launched since 2005, its applicability is somewhat diminished. Moreover, the report's conclusions are not fully supported by the evidence."

Mark Allen, head of the IMF's Policy Development and Review Department, said he was not surprised the IEO had identified areas in which the Fund's exchange rate analysis could be strengthened.

"Exchange rate...