Singapore - The head of the International Monetary Fund (IMF) on Friday predicted a revaluation of major Asian currencies against the dollar as a "rebalancing" of the world's economy gets underway.

"I expect that in the coming years the revaluation of the Asian currencies will take place, reflecting the rapid growth of Asia, the important yield that capital inflows can find in Asia and altogether the increasing weight of Asia in the global economy," IMF managing director Dominique Strauss-Kahn said in Singapore, where he was attending a sideline business meeting at the Asia-Pacific Economic Cooperation (APEC) summit.

The IMF chief predicted the appreciation of Asian currencies against the dollar would take place as part of the rebalancing of the global economy, as Asian economies such as China's shift their policies towards domestic-led growth instead of over-reliance on exports and US consumerism.

"My advice would be not to resist the revaluation too long because it is part of the [rebalancing] package," he said.

"A revaluation of the currency of China will have as a result an increase in household purchasing power, raise the share of labour, and a general support for reorienting investment," Strauss-Kahn told a press conference after talks with Asian finance ministers and business leaders.

The talks focused on the IMF's future role in Asia, where the institution is still widely faulted for exacerbating the Asian financial crisis of 1997-98.

"The time is over when the IMF believed it was the only one that knew what to do," Strauss-Kahn said.

Many Asian countries such as Indonesia, the Philippines, South Korea and Thailand were forced to go to the IMF as a lender of last resort to provide emergency funding as their export-led economies faltered, foreign exchange reserves disappeared, local banks crashed and currencies depreciated dramatically.

The IMF's tough conditions on its loans and calls for fiscal discipline arguably added to the dramatic declines in economic growth in the region in the aftermath of the 1997 crisis, and added to widespread unemployment, bankruptcies and a rise in poverty.

The IMF has apparently learned from its past mistakes in time to provide better advice for the West as it experienced its worst financial crisis in decades.

"Because of lessons from the Asian crisis, the Latin crisis, we were the first to ask for a big fiscal stimulus," Strauss-Kahn said. "Following the advice, a huge stimulus has been implemented across the world, and it's because of this more than anything else that we've avoided a depression."

Asian governments are still reluctant to approach the IMF for emergency funding, even though few are currently in need of it given the huge reserves they have learned to put away since the last regional crisis.

"There is a keenness to see how the IMF could be re-engaged in the region, going forward," Singapore Finance Minister Tharman Shannugaratnan said.

"One of the ideas that is gaining currency is how the IMF's own liquidity facilities, such as the flexible credit line, could be coordinated with a regional mechanism such as the Chiang Mai Initiative," he added.

The Chiang Mai Initiative is an Asian fund of 120 billion dollars to be used as a source of emergency liquidity for the region, in addition to the IMF. (dpa)