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S.Korea hopes to bridge divide over yuan

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1 S.Korea hopes to bridge divide over yuan on Fri Apr 23, 2010 11:51 am


S.Korea hopes to bridge divide over yuan

WASHINGTON, April 22 (Reuters) - South Korea believes it can mediate between China and trade partners including the United States who are complaining loudly that the yuan currency is greatly undervalued, a senior Seoul official said on Thursday.

'To the extent that anyone can play that role, I think Korea has a reasonable chance of pulling it off,' said Shin Hyun Song, senior officer to South Korean President Lee Myung-bak for the International Economy.

'We are a very open economy that's been through crises and successfully navigated those crises,' he told Reuters ahead of meetings of the Group of 20, World Bank and International Monetary Fund in Washington.

'We have a certain amount of street credibility in the international community.'

South Korea will host this year's G20 leaders' summit in November as well as a meeting of finance ministers in June.

He said that Seoul's policy discussions on currency have focused more on coping with the appreciation of the South Korean won than on China's currency, which some Western economists estimate is undervalued by as much as 40 percent.

But Shin, a Princeton University economics professor, said China's domestic economic conditions would permit a strengthening of the yuan, also known as the renminbi.

'Conditions in China are such that, even in China's own interest, there are voices within China urging an appreciation of the renminbi,' he said

In the face of strong economic growth and strong asset growth in the banking sector that China is seeing now, 'the textbook response to those events is to allow some appreciation of your currency,' said Shin.

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