Turkish Minister Says China Gaining Unfair Advantage

The Wall Street Journal’s Geoffrey T. Smith reports that it doesn’t matter whether or not China and the U.S. are actively trying to keep their currencies low, the end result is pain for emerging markets, Turkish Finance Minister Mehmet Simsek said Saturday.

In an interview with Dow Jones Newswires on the sidelines of the World Economic Forum, Mr. Simsek said he thinks China is deliberately depressing its exchange rate, and that that is giving it an “unfair advantage” against countries like Turkey “that compete in the same products for the same markets.”

“Why else would a country accumulate almost $3 trillion of foreign reserves?” he asks. “It’s quite obvious.”

He was less damning about the U.S. Federal Reserve’s policy of “quantitative easing”, saying he didn’t think the U.S. was trying to manipulate its currency, but said the consequences were also highly negative for Turkey, by helping to inflate the price of commodities such as oil that Turkey needs to import, and by stimulating inflows of hot money in search of higher returns than those on the dollar.

He also declined to criticize the European Central Bank for running a historically loose policy, saying that “there are real issues with some countries in the periphery. It’s understandable.”

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