Euro strong vs dlr, yuan undervalued - IMF's Belka

  @ibtimes on December 02 2009 8:10 AM

The euro is on the strong side against the dollar and could strengthen more because of carry trades and speculative play on its possible further rise, IMF European head Marek Belka said on Wednesday.

There is such a risk, because we have a situation of carry trades -- speculation on further euro appreciation and on the difference in interest rates, Belka told reporters.

He said the Brazilian real and the Russian rouble were also under appreciation pressure from such trades and added the Polish zloty was close to fair value.

Belka said the Chinese yuan was undervalued and that its appreciation would help solve global trade and savings imbalances.

One of the elements of the imbalances is the undervaluation of the yuan, there is no doubt about it, Belka said.

He said the International Monetary Fund, which recently completed a regular report on the euro zone economy, did not expect the single currency area to dip into recession again.

This is not something we expect, he said.

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