Soros agrees currency war is a possibility

London: Billionaire investor George Soros said he shared concerns about a "currency war" and China must do more to accept its responsibilities in the global monetary system.

"I share the growing concern about the misalignment of currencies," Soros wrote in an article for the Financial Times.

"Brazil's finance minister speaks of a latent currency war, and he is not far off the mark. It is in the currency markets where different economic policies and different economic and political systems interact and clash."

China last week stiffened its opposition to a rapid appreciation of the yuan, with Premier Wen Jiabao saying his country will stick to its policy of gradually increasing the currency's flexibility and lashed out at European Union leaders for teaming with the US to pressure his government.

China's case may be bolstered by the recent willingness of Japan, Brazil, Switzerland and other nations to temper the strength of their currencies through intervention.

The world's second-largest economy remains the target of the greatest criticism. Even as it boasts the fastest-growing major economy, it has limited the yuan's appreciation to about 2 per cent versus the dollar since pledging in June to make it more flexible.

"Whether it realises it or not, China has emerged as a leader of the world," said Soros."

If it fails to live up to the responsibilities of leadership, the global currency system is liable to break down and take the global economy with it.

US response

US impatience with China boiled over on September 29 when the House of Representatives passed a measure that would let American companies seek import duties to prevent Chinese manufacturers from using an artificially weak yuan as a competitive tool.

The measure won't go to the Senate until after US congressional elections in November.