IMF compiles forex rules guide

By Lesley Wroughton

WASHINGTON (Reuters) - The International Monetary Fund is compiling a guide on how its rules on global currencies should be implemented, but the effort is sparking concern among members that China will see it as a way to compel it to quicken the pace of strengthening its yuan.

Even though the guidelines are not yet final, IMF board sources, speaking on condition of anonymity, said there were concerns the effort will be seen by a sensitive Chinese government as yet another bid by the United States, and now Europe, to ratchet up pressure for a yuan <CNYNDF=> appreciation.

The IMF rules on currency relations are so complex that the global economic watchdog felt the need to come up with the guidance for staff and member countries.

The new rules on currency surveillance make it easier for the IMF to declare that a country is keeping its exchange rate fundamentally misaligned to boost exports, and lays out the use of special consultations to resolve problems with currencies that are out of line and causing problems for others.

Tensions between the IMF and China over the rules, which were adopted in June of last year, delayed completion of the IMF's 2007 report that evaluates the Chinese economy and its exchange rate policy.

China and several other countries demanded the IMF explain the new rules since it could have wider consequences on world trade.

The People's Bank of China, which keeps the currency on a tight leash, has recently allowed the yuan to rise against the dollar. But it is worth less against the euro than in July 2005 when China unshackled the currency from a dollar peg to float within managed narrow bands.

There is nothing that compels China to act on what the IMF says on the yuan, except commitments to abide by rules of the international financial system overseen by the fund.