IMF head fears dollar’s abrupt fall

WASHINGTON, Oct. 23 (UPI) -- The outgoing International Monetary Fund head says the U.S. dollar’s decline so far has been orderly but the greenback faces a risk of an abrupt fall.

Speaking Monday in Washington at the agency’s annual meeting, Rodrigo Rato, who will soon leave his post as IMF managing director, warned any large-scale dumping of the dollar could shake confidence in U.S. assets and affect major economies of the world, The Financial Times reported.

Separately, the Times quoted U.S. Treasury Secretary Hank Paulson as saying the IMF needs to make its surveillance of member country exchange rate policies more effective.

“Without meaningful exchange rate surveillance, governance and management, reform will ring hollow,” Paulson said.

Paulson and other finance ministers from the Group of Seven most advanced economies have urged China to allow its currency to appreciate at a faster pace to ease the pressure on currencies such as the Euro which some feel are being disproportionately affected by the dollar’s decline, the report said.

Rato said governments must reduce global current account imbalances instead of relying on exchange rates to achieve the adjustment, the Times report said.