DAVOS, Switzerland Jan 23 Financial markets
need more clarity on how the Chinese authorities are managing
their currency, particularly the relationship of the yuan to the
U.S. dollar, IMF Managing Director Christine Lagarde said on
Asked at a panel discussion in Davos whether she would back
capital controls by China for a period, she avoided a direct
reply but said: "Certainly a massive use of reserves would not
be a particularly good idea ... Some of it was already used."
She said that the market needed "clarity and certainty"
about China's exchange rate basket "in particular with reference
to the dollar, which has always been the reference".
"That would be the right move to make," she added.
Bank of Japan governor Haruhiko Kuroda said his personal
view was that capital controls would be an appropriate way for
China to reconcile its need to keep domestic monetary policy
loose while stabilising its currency.
(Reporting by Noah Barkin and Paul Taylor)