UPDATE 1-BRICS discussed global monetary reform, not yuan -China

Thu Apr 14, 2011 9:03am GMT

(Adds further quotes)

SANYA, China, April 14 (Reuters) - The five BRICS nations discussed reform of the international monetary system at a meeting in southern China on Thursday, but steered clear of the contentious topic of the Chinese exchange rate, a senior Chinese official said.

Wu Hailong, an assistant Chinese foreign minister, said the leaders of Brazil, Russia, India, China and South Africa had also discussed the composition of the Special Drawing Right, the International Monetary Fund's unit of account.

"The yuan exchange rate was not on the agenda of this BRICS summit meeting, but the reform of the international monetary system is one of the key issues of the meeting," Wu told a news conference.

Brazil's President Dilma Rousseff has faced complaints at home from manufacturers and officials, who say China's cheap yuan currency is undercutting domestic production and that China is soaking up Brazil's commodities such as iron ore, but not buying value-added products.

Still, the five BRICS nations took another step towards cementing their global influence on Thursday, calling for a broad-based international reserve currency system "providing stability and certainty". [ID:nL3E7FE07J]

"The five countries agreed to discuss the role of the SDR in the current international monetary system, including the composition of the SDR currency basket," Wu added.

And the development banks of the five BRICS nations agreed in principle to establish mutual credit lines denominated in their local currencies, not in dollars. [ID:nL3E7FE0AV]

"Trade settlement in local currencies among the five countries will promote trade and investment liberalisation. It will lead to even closer business and trade ties among these five countries," Wu said.   Continued...

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