IMF and World Bank Struggle to be Relevant
The International Monetary Fund is struggling to both influence trade, monetary and fiscal policy in an age where it is becoming increasingly less relevant.
In Latin America, borrower states such as Argentina have already refinanced IMF loans with cash rich Venezuela, while proclaiming IMF austerity programs are of little value in restarting the economy. In the Arab world, regionally generated foreign direct investment led by UAE and Saudi Arabia similarly overshadows the funding and terms available from the IMF.
Nevertheless, an explosive future currency realignment is on the horizon, If the Chinese Yuan and Saudi Riyal were free floating today, their value would be different. If China were not pegging the Yuan to the US dollar, the price of Chinese goods which are omnipresent in US consumer markets, would already have increased substantially over past years. The case for freeing the Yuan to allow it to rise against the dollar on the basis of basic economics of free trade is clear.
Asking for adjustments to the Saudi Riyal is not a clear cut case. The US benefits greatly from a world petroleum market based largely on the US dollar. The price of the dollar is propped up as buyer and supplier countries maintain adequate reserves of the currency for energy market transactions. If pressure from the US led to major exporters pricing and asking for major contract transactions in Euros or another currency, the US dollar would suffer.