Don't demonize the markets for Southeast Asia's currency plunge, the head of the International Monetary Fund said Tuesday in what amounted to a rebuttal of Malaysian Prime Minister Mahathir Mohamad's calls for a ban on currency trading.

The free flow of capital in and out of national markets "has its risks," IMF Managing Director Michel Camdessus told the opening session of the fund and World Bank's annual meetings."But are there better grounds for prosperity than freedom?" he said.

Earlier in the morning, Chinese Premier Li Peng called for rich countries to heed the needs of the developing world. He also rejected tying aid to political conditions and condemned the threat of sanctions in trade negotiations - a tacit slap at the United States.

"Such practices as bullying the weaker or less fortunate by dint of one's power or wealth should not go unchecked," Li said.

"Still less should countries be allowed to impose sanctions or threaten to do so, at every turn against others," he said. The United States has repeatedly used the threat of sanctions in negotiations with China to lower trade barriers, curb copyright violations and end human rights abuses.

Several days of IMF and World Bank meetings and seminars have been dominated by concern over the recent sharp currency and stock market drops in Southeast Asia, a region until recently lauded for its high levels of growth.

In a weekend speech, Mahathir put much of the blame for the meltdown on big international funds and called for a ban on trading currency for profit.

Today, Malaysia's finance minister said Mahathir's remarks did not represent the country's policy. In an attempt to reassure investors, the minister, Anwar Ibrahim, said he was clarifying the issue: "It's not fair to take what Mahathir said as representative of our policies. He was expressing a regional concern."

Camdessus, meanwhile, said that global markets can overreact, and that risk accompanies the opportunities offered by the huge amounts of private investment cap-i-tal roaming the globe in search of the highest profits.

But, he said, "The lesson to be drawn from recent developments is not about the risks of globalization - and still less about demonizing the markets - but rather about the importance of exercising good citizenship when tapping them."