Need forex flexibility for rebalancing growth-U.S.

WASHINGTON Tue Oct 5, 2010 11:30am EDT

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WASHINGTON Oct 5 (Reuters) - Allowing currency exchange rates to respond to market conditions is vital to ongoing efforts to rebalance global growth and will be on the agenda when finance chiefs meet Friday and Saturday, a senior U.S. Treasury department official said on Tuesday.

"It's vital to achieve more balanced global growth. That's why the United States has been working to address distortions in the pattern of global growth," the U.S. official said, adding that "market-oriented exchange rates (are included) in the set of policy tools that are vital to achieving that rebalancing."

The official said the International Monetary Fund should take a stronger role in reviewing and speaking publicly about currency practices of individual countries.

"The IMF has to have an ability to speak forcefully and clearly in its surveillance of the major economies," the official said.

The IMF and World Bank hold semiannual meetings this weekend, with and finance ministers and central bankers from around the world attending. (Reporting by Glenn Somerville and Mark Felsenthal, editing by Neil Stempleman)

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