Nov. 13 (Bloomberg) -- U.S. Treasury Secretary Timothy Geithner lauded a commitment by Asia-Pacific ministers to flexible exchange rates even as his Chinese counterpart praised the yuan’s peg for helping the global recovery.

Finance ministers from the 21-member Asia Pacific Economic Cooperation group pledged policies favoring “market-oriented exchange rates that reflect underlying economic fundamentals” in a joint statement after gathering in Singapore yesterday. The statement came three days before U.S. President Barack Obama arrives in China with an agenda that includes the yuan.

“You saw today countries in the region underscore their basic commitment to moving over time to a more flexible market- determined exchange system,” Geithner said in an interview with Bloomberg Television. He also praised China for playing a “major” role in the global recovery and said its leaders are committed to shifting reliance away from external demand.

Assistant Finance Minister Zhu Guangyao said in a press conference that one of China’s contributions to the recovery has been maintaining “currency stability.” Tensions over the yuan’s peg to the dollar may rise as European Central Bank President Jean-Claude Trichet heads to Beijing in coming weeks to press for greater flexibility in the currency.

“Nobody will be hoping for a big bang approach where you get a significant appreciation of the Chinese currency,” said Alvin Liew, an economist at Standard Chartered Plc in Singapore.

‘Big Cost’

Zhu said in a press conference with the APEC ministers that China’s policy of maintaining “currency stability” has been a “component” of crisis-response efforts that have contributed to the global rebound. There would be a “big cost” for any early withdrawal of those measures, including fiscal, monetary and exchange-rate commitments, he said.

China has maintained the yuan’s value at around 6.83 against the dollar since July 2008 after letting it appreciate 21 percent in the previous three years. The currency has declined against other counterparts, including the euro, in lock-step with the dollar this year.

Geithner reiterated yesterday that it’s “very important” the U.S. maintain a “strong” dollar. Its slide against counterparts from the yen to the euro this year has deepened speculation among investors that its status as the world’s dominant reserve currency may be lost.

Record low U.S. interest rates are funding global “carry trades” and the dollar is still overvalued, the International Monetary Fund said last week.

‘Special Responsibility’

“We bear a special responsibility” because of the U.S. economy’s global role, Geithner said at the joint press conference.

APEC finance ministers echoed calls by policy makers around the world for reduced reliance on Asian savings and American spending, a pattern that analysts say held down U.S. borrowing costs and fueled a credit bubble. In a joint statement, they also reiterated a pledge to maintain stimulus efforts “until a durable recovery in private demand is secured.”

Geithner said there are “early signs” that the world is addressing imbalances in spending and saving that contributed to the global crisis.

Asia is “leading the world” back to recovery, the Treasury chief said. American exports are also growing at a healthier rate, he said. While it’s too soon to withdraw stimulus measures, the Obama administration is committed to reducing the record U.S. fiscal deficit, a legacy of reliance on overseas funds and unprecedented stimulus spending to counter the crisis.

Gradual Approach

China has no plans to alter its policy of step-by-step changes in the value of its currency, Assistant Finance Minister Zhu also said at yesterday’s press briefing.

China’s exchange-rate policy was “working out well for everybody” so far, Thai Finance Minister Korn Chatikavanij said in an interview. His comment countered the argument by Nobel laureate Paul Krugman last month that China is “stealing” jobs by devaluing its exchange rate.

“What’s more important is that the Chinese economy is strong and robust,” Korn said. “So we respect what they have to do in order to achieve that end goal.”

Besides China, other APEC members also oversee some form of control on their currencies. Malaysia, Singapore and Vietnam manage their exchange rates against a basket of other currencies, while Hong Kong’s dollar is pegged to its U.S. counterpart. Taiwan, South Korea and Thailand regularly buy and sell their currencies in market interventions.

“There’s no silver bullet,” Singapore Finance Minister Tharman Shanmugaratnam said. “None of us around the table were calling for or thought it advisable to have any significant realignment.”

To contact the reporter on this story: Chris Anstey in Singapore at canstey@bloomberg.net

Last Updated: November 12, 2009 11:43 EST