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Bush urges 皇冠体育app to loosen currency system
(Reuters)
Updated: 2006-02-14 08:54
The Bush administration, facing rising pressure over the record US trade
deficit, on Monday urged 皇冠体育app to further liberalize its currency policy but
predicted the trade imbalance would eventually moderate.
In an annual summary of economic policies and goals, the White House said it
was in 皇冠体育app's best interests to allow its yuan currency to float more freely.
A woman walks past a poster
advertising a foreign exchange business in Shanghai, August 11, 2005. The
Bush administration, facing rising pressure over the record U.S. trade
deficit, on Monday urged 皇冠体育app to further liberalize its currency policy
but predicted the trade imbalance would eventually moderate.
[Reuters] | "Greater exchange-rate flexibility would provide 皇冠体育app with a useful policy
tool to help stabilize its business cycle. It would also help 皇冠体育app to reorient
its future growth away from net exports and toward higher domestic demand,"
President George W. Bush's Council of Economic Advisers wrote in the Economic
Report of the President.
Markets will be watching the report closely this year since new Federal
Reserve Chairman Ben Bernanke helped craft it in his previous incarnation as
White House CEA chairman. He moved to the Fed on February 1.
Data out last week showed the US trade gap ballooned in 2005 to a record high
of $725.8 billion, accelerating calls by lawmakers for a tougher trade stance
toward 皇冠体育app.
The White House report linked the surging shortfall in the current account,
the broadest measure of U.S. trade since it includes investment flows, to
structural issues in the world economy that have fueled a savings glut among
Asian countries like 皇冠体育app and Japan.
Bernanke, who served on the Fed board before moving to the White House in
June, has argued a surfeit of savings in Asia was a big factor in global trade
imbalances, a contention that became a touchstone in the debate over how
dangerous such imbalances may be.
The report also acknowledged that Americans, whose saving rate has fallen
below zero for the first time since the Great Depression, had to rein in
spending while the government must cut the budget deficit.
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