2010-02-06 14:56:01.250 GMT

(See {GMEET } for more on the G-7 meeting.)

By Simone Meier
Feb. 6 (Bloomberg) — Major economies with inflexible
exchange rates must consider allowing them to strengthen to help
narrow international trade imbalances, according to a report
prepared for a meeting of finance chiefs from the Group of
Seven.
“Countries with inflexible nominal exchange rates must
permit greater flexibility in real exchange rates either through
higher inflation or a nominal appreciation of their currency,”
the document, drawn up by Canada’s finance ministry and obtained
by Bloomberg News, said.
G-7 finance ministers and central bankers are meeting in
Iqaluit, Canada, today.
The document doesn’t mention which countries are viewed as
having inflexible currencies.
China has attracted international criticism this year from
foreign governments for controlling the value of its yuan since
July 2008 after it strengthened 21 percent against the dollar
over the previous three years.
Although nations are entitled to set their own currency
policies, the “freedom to choose their exchange rate
arrangements carries an obligation not to manipulate exchanges
so as to gain a competitive advantage,” the document said.

For Related News and Information:
Stories on currencies: NI FRX
Finance industry monitors: BANK and INS
Stories on central banks: NI CEN
Credit crunch page: WWCC
Stories on finance: NI FIN
Stories on the credit crisis: NI CRUNCH BN
Government relief programs: GGRP
Stories on rescue programs: RESQ
Credit crunch page: WWCC
For G-7 news: NI G8 BN
Distressed bonds: DIS
Global statistics: STAT

–With assistance from Simon Kennedy in Iqaluit. Editors:
Andrew Barden, Paul Badertscher

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