"China has its own large internal imbalances. Allowing an appreciation of their exchange rate would help their own internal adjustment and it would also help global adjustment," Macklem said in response to questions after a speech in Winnipeg.

Canada, like the United States, has been consistent in arguing that the Chinese currency is undervalued and therefore distorts trade to the detriment of its partners.

Macklem said the right foreign exchange policies by economies around the world could reduce the risk of a disorderly adjustment of global imbalances, referring to the gap between the large US current account deficit and large surpluses in China and some oil-producing countries.

His remarks come after the International Monetary Fund announced a new directive on Monday against foreign exchange policies that trigger instability. Analysts say the changes, the first of its kind for the IMF in 30 years, could help resolve the dispute between the United States and China over the Chinese yuan's value.

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