Zoellick: currencies to be discussed in Istanbul

Currency issues will likely be discussed at this week's annual meeting of the World Bank and the International Monetary Fund, the bank's president said Tuesday.

Robert Zoellick did not say which currencies could make the agenda at the meeting in Istanbul, Turkey, saying only that "if you have a currency that has a weakness, that will affect other currencies, and that can affect trade.

Speaking in a teleconference briefing for reporters, Zoellick reiterated recent remarks that the U.S. dollar's status as the world's reserve currency should not be taken for granted.

But he downplayed suggestions that the end of the dollar's hegemony was inevitable, saying other major currencies, including the euro, also face challenges. He said that with appropriate action, the U.S. should have a "strong dollar."

Zoellick said China has played a "very constructive" role during the global recession by using fiscal and monetary policy to boost its economy, but that the ensuing credit expansion will need to be taken back.

In the longer-term, China must move away from export-based growth to greater domestic demand and consumption, Zoellick said, but added that many countries were in the same situation, including Japan and Germany.

The Chinese government is taking steps to make these "structural shifts," but this is "not going to happen overnight," he said.

Many analysts think the best way for China to rebalance its economy, and in the process rebalance the world economy, is to let its currency _ the yuan _ rise more quickly in value against the dollar to which it is pegged. A higher currency makes imports, priced in dollars, cheaper and would help reduce the U.S.'s massive trade deficit with China.

So far, Chinese revaluation of its currency has been slow.