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China's leader warns about fluctuating currencies

world Updated: Jun 27, 2010 23:05 IST

Chinese President Hu Jintao, in an apparent jab at critics of his country's currency policy, warned today that global financial markets can be threatened by wildly fluctuating exchange rates.

In a speech at a summit of the world's 20 top industrial and developing nations, Hu didn't directly address complaints that an undervalued Chinese currency gives China's exporters an unfair advantage and swells the country's politically sensitive trade surplus with the United States and others.

But he warned of deep and serious global economic risks as "exchange rates of major currencies fluctuate drastically and international financial markets suffer from persistent volatility."

The value of the yuan, or renminbi, is a major irritant in China's relations with the United States. Some in the United States say quicker revaluation of the yuan is crucial to a global economic recovery.

In an effort to dampen criticism, China announced before the summit that it would start allowing its currency to rise in value against the dollar. But senior Chinese officials have vowed during this weekend's economic summit that they would not bow to outside pressure to allow the currency to rise more quickly.

Some critics, including those within the US Congress, have not been satisfied with Beijing's cautious moves.

At a meeting Saturday between US President Barack Obama and Hu, White House officials said Obama welcomed as a "first step" China's currency announcement. But Obama, the officials said, noted that implementation of the Chinese decision would be very important.