There were no secret backroom agreements at the Group of 20 (G-20) meeting in Shanghai to manage the exchange rate between the dollar and renminbi, the deputy managing director of the International Monetary Fund (IMF) told CNBC, rebuffing reports of a deal.
"We didn't hear anything," Zhu Min, deputy managing director of the International Monetary Fund (IMF).
"The (Chinese) vice minister of finance (Zhu Guangyao) clearly denied the rumors and I don't think there was any secret deal."
The comments follow speculation that there could have been some kind of tacit agreement made at the recent G20 summit to let the dollar depreciate in order to relieve the pressure on other currencies, such as the yuan.
On Tuesday, Zhu Guangyao said there was no secret agreement between the U.S. and China regarding adjustments to exchange rates, Reuters reported.
A number of hedge funds are betting against the renminbi in the belief that the Chinese government will ultimately resort to weakening the currency as a response to slower growth. Zhu Min said that the authorities were looking to stabilize the currency, however.
"I think the Chinese authorities made it very clear that they were trying to maintain the renminbi stability, that's a good thing, and you will see the market become calmer, which is also a good thing but in the medium-term we encourage the Chinese authorities to put the renminbi exchange rate into a more flexible (market-based) regime. The move into that will cause more volatility which is very normal."
"It is the flexibility that provides the cushion for the system…so I think that is the key issue," he added.
Zhu Min said that exchange rate volatility was to be expected and that currency markets were a "tricky business."
"You see, a lot of exchange rates were depreciating against the dollar but if you're looking at the real effect of the exchange rates, actually a lot of currencies are appreciating because the dollar is not necessarily equivalent to a country's export basket so you see this diverging situation which makes it very difficult to judge....this divergence will probably still continue while the dollar is on the upside."