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IMF's Rato-Dollar overvalued despite orderly slide

WASHINGTON
Sat Oct 20, 2007 7:25pm EDT
International Monetary Fund Managing Director Rodrigo de Rato attends a news conference at the IMF headquarters in Washington, during the annual IMF-World Bank meeting, October 20, 2007. The 2007 annual meeting is De Rato's last as IMF Managing Director. REUTERS/Yuri Gripas

WASHINGTON (Reuters) - The dollar is overvalued in the medium-term even though it has depreciated in recent years, and markets are betting on the greenback to fall further, International Monetary Fund Managing Director Rodrigo Rato said on Saturday.

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"In the medium term, the dollar is overvalued," he said at a news conference, adding "the markets are also betting right now that the dollar is overvalued."

He said the decline of the dollar, which has shed some 8 percent against the euro this year and hit a record low against a basket of major currencies, has been orderly and added that the exchange rate is set by markets.

"And in that respect, he said, "markets can behave differently sometimes than economic analysis".
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