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US insists on a flexible yuan

TIMOTHY Geithner, the US Treasury secretary, urged China yesterday to make its exchange rate more flexible, stating that it was in the Asian country’s own interest to do so.

“As I said before and I’ll say it again, but I want to make sure I am repeating myself, I am confident that China will decide it’s in their interest to resume the move to a more flexible exchange rate that they began some years ago and suspended in the midst of the crisis,” he said.

During a recent trip to India, he said that economic recovery was starting to look strong.

However, Beijing officials have rejected the request and said they would make changes to the yuan with caution and on the country’s own terms.

“We don’t want to see our exchange rate kept unchanged,” said Zhang Yansheng, an economist at the National Development and Reform Commission.

The US has been applying recent pressure on China to allow its currency to move after a 20-month freeze to ease the trade tensions between the two countries.

Geithner is expected to raise the issue of whether or not China manipulates its currency at the G20 meeting next month.

The Chinese have denied that they manipulate the yuan, after a spokeswoman said earlier yesterday that the US trade deficit did not depend on a firmer yuan.