UPDATE 1-U.S. Treasury official: China must press ahead with currency reform

Tue May 26, 2015 10:38am EDT
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(Adds comments on Greece, more details on China, background)

May 26 (Reuters) - China must press ahead with currency liberalization plans for the yuan to join the International Monetary Fund's reference basket of currencies, a senior U.S. Treasury official said on Tuesday.

In a call to preview discussions among Group of Seven nations in Germany this week, the official said the United States would emphasize the need to find a pragmatic solution for Greece and urge all parties to come to an agreement.

Failure would hurt the Greek people but could also have unpredictable consequences for the European and even global economies, said the official, who spoke on condition of anonymity.

More broadly, major countries had to do more to boost growth and stimulate demand, and an uptick in growth in some economies did not mean it was time to declare victory, the official said.

The IMF said earlier on Tuesday that the yuan was no longer undervalued but urged China, which wants its currency to be included in the Special Drawing Rights basket, to quicken reforms.

The senior Treasury official said the United States urged China to continue and complete plans to open its capital account and liberalize its management of the exchange rate.

Those reforms were needed for the yuan to join the SDR basket, the official said.

Although China had made significant progress with reforms and the yuan had appreciated, more work was needed, and the official noted the last U.S. assessment was that the currency remained significantly undervalued.   Continued...