To view or print the PDF content on this page, download the free Adobe® Acrobat® Reader®. April 15, 2009 Statement by Treasury Secretary Timothy Geithner Washington, D.C.– Today I am sending to Congress the semi-annual Report to Congress on International Economic and Exchange Rate Policies. The Report is required under Sections 3004 and 3005 of the Omnibus Trade and Competitiveness Act of 1988. The period examined is the second half of 2008, but where appropriate information up to the end of March 2009 is included. The Report focuses on the economic, financial and exchange rate impacts of the ongoing financial crisis on the This Report was written recognizing that the global economic and financial backdrop has changed dramatically. The global economy is in recession; the first decline in global output in more than sixty years. Credit market conditions remain strained and financial market volatility continues to be elevated. Since the start of the recession there have been more than 5 million job losses in the The financial shocks of the past 20 months have caused transformational changes to the environment in which the Today's environment is characterized by an unprecedented contraction in global trade and, for many economies, sharp declines in the dollar value of their exports. Virtually every advanced economy and many emerging markets are in recession. Deleveraging and heightened risk aversion by investors has led to a large unwinding of foreign risk positions and a reversal in capital flows to emerging markets. This caused many currencies to depreciate against the dollar in the second half of 2008, and further into 2009, and in many cases the currency declines were sharp. Reserve accumulation came to a halt in the second half of 2008 and reserve assets, in the aggregate, declined as reserves were sold to stem or slow the pace of currency decline. Similarly, for many economies current account balances have been under pressure from falling exports, weak demand for imports and declining commodity prices. In the course of the adjustment the current account deficit of the Treasury makes its determination on currency today in the face of an exceptional global economic crisis in which many major trading partners have made recent progress on seeking to strengthen demand through economic stimulus and have committed to avoid competitive devaluation. In the current Report, Treasury did not find that any major trading partner had manipulated its exchange rate for the purposes of preventing effective balance of payments adjustment or to gain unfair competitive advantage. Many economies still maintain fixed exchange rate regimes, either to a single currency or a basket of currencies. Nevertheless, there has been considerable movement toward greater exchange rate flexibility. Several economies discussed in this Report, for example, have either moved away from exchange rate pegs to the U.S. dollar or have allowed for greater flexibility within a managed exchange rate regime. Restrictions on the flow of capital into and out of economies have also been relaxed. Notwithstanding the current economic crisis, further movement along these lines is likely. As noted, rather than purchasing foreign currency to prevent the appreciation of their currencies to support export growth, many emerging market economies have been using their foreign exchange reserves to temper the depreciation of their currencies. With respect to Given The crisis has led to increasingly close cooperation among the Leaders and policymakers of many of the world's largest economies. It also underscores the important role of the IMF in promoting effective surveillance over the international monetary system and more balanced global economic growth. Most economies covered in this Report have relaxed monetary policy and virtually all have enacted fiscal stimulus packages of varying sizes to support a restoration of growth. At the London G-20 Leaders' ### REPORTS |
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