G7 discusses naming China in call for FX flexibilty

WASHINGTON, Apr 21 (Reuters) Finance chiefs from the Group of Seven rich nations are currently discussing singling out China in their calls for more flexible currency rates in emerging economies, a draft of the G7's communique seen by Reuters showed today.

A paragraph on foreign exchange markets was contained in the draft communique but sources said this wording had not yet been agreed by finance ministers and central bankers, who were still meeting at the St Regis hotel in downtown Washington.

''Greater exchange rate flexibility is desirable in emerging economies with large current account surpluses, especially China, for necessary adjustments to occur,'' the draft said.

The rest of the currency market paragraph precedes the sentence on China and has also yet to be agreed. The final communique is due out at 0400 hrs IST.

''We reaffirm that exchange rates should reflect economic fundamentals. Excess volatility and disorderly movements in exchange rates are undesirable for economic growth. We continue to monitor exchange markets closely and cooperate as appropriate.'' Reuters SC VP0300