2010.10.0605:16:00UTC+00IMF Chief: Exchange Rate Use To Solve Domestic Problems To Risk Currency War

The use of the exchange rate by governments to solve domestic problems risks a currency war, International Monetary Fund Managing Director Dominique Strauss-Kahn said.

In an interview published on the Financial Times website dated Tuesday, Strauss-Kahn said there is clearly the idea beginning to circulate that currencies can be used as a policy weapon. "Translated into action, such an idea would represent a very serious risk to the global recovery . . . Any such approach would have a negative and very damaging longer-run impact."

On September 28, Strauss-Kahn told reporters that there is no big risk of a global currency war. The currency intervention will not be helpful. A low key intervention will not have any effect, he said. If it is done strongly, it will cause retaliation, Strauss-Kahn warned.

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