UPDATE 1-IMF’s Blanchard sees China strengthening yuan

* IMF economist optimistic ahead of S. Korea G20 meeting

* China rate rise little related to yuan, says Blanchard
(Updates with more quotes, background)

By Brad Haynes

SANTIAGO, Oct 21 (BestGrowthStock) – The International Monetary
Fund’s chief economist said on Thursday he sees China committed
to strengthening the yuan as tensions over currencies mount
ahead of this week’s G20 finance ministers meeting.

The IMF’s Olivier Blanchard said the goal of the fund and
the Group of 20 should be to help a number of emerging market
countries accept an appreciation of their currencies in a
“cooperative fashion.” For complete G20 coverage: [nTOE69K01G]

“The danger is that too many countries put capital controls
or accumulate reserves to prevent the process,” he told
reporters during a Chile Central Bank conference in Santiago.

When facing an overwhelming level of incoming investment,
though, Blanchard said countries need to keep options open.

“In the case of Brazil I think it is reasonable, given the
appreciation they have seen, to think about … the capital
measures they have put in place,” he said.

Blanchard said that China’s surprise interest rate hike
earlier this week was only distantly related to its currency
and would have a limited negative impact on commodity prices.

China’s central bank raised interest rates for the first
time in nearly three years on Tuesday, reflecting concerns of
overheating in the world’s fastest-growing major economy.

Blanchard said Chinese authorities emerged from meetings in
Beijing last week with a clear plan to increase domestic demand
and reduce the country’s dependence on exports.

“We think that China is moving in the right direction.
We’re sure that appreciation will come. For the world, faster
appreciation would be useful,” he said.

“If they (China) appreciated faster it would allow a number
of other countries which are worried to appreciate faster.”
(Editing by Alonso Soto; Editing by Kenneth Barry)

UPDATE 1-IMF’s Blanchard sees China strengthening yuan