Geithner Sees ‘Damaging Dynamic’ in Global Currency Policies

Treasury Secretary Timothy F. Geithner said a “damaging dynamic” of large economies keeping their currencies undervalued can cause quicker inflation and asset bubbles, and restrict growth.

“More and more countries face stronger pressure to lean against the market forces pushing up the value of their currencies,” Geithner said in remarks prepared for a speech at the Brookings Institution in Washington today. “The collective impact of this behavior risks either causing inflation and asset bubbles in emerging economies, or else depressing consumption growth and intensifying short-term distortions in favor of exports.”