G20 Leaders Pledge To Avoid Currency War
Leaders of the G20 group of major economies have agreed to avoid “competitive devaluation” of currencies after a second day of difficult talks in the South Korean capital, Seoul.
Leaders agreed to come up with “indicative guidelines” to tackle trade imbalances affecting world growth. Tensions had been high between some delegations over how to correct distortions in currency and trade. Some fear the conflict, chiefly between China and the US, may threaten growth.
US President Barack Obama said there should be no controversy about fixing imbalances “that helped to contribute to the crisis that we just went through”. “Exchange rates must reflect economic realities,” he said.
“Emerging economies need to allow for currencies that are market-driven. This is something that I raised with President Hu of China and we will closely watch the appreciation of China’s currency”. Washington says that China’s currency, the yuan, is artificially weak and gives Chinese exporters an unfair advantage as well as leading to Beijing amassing huge foreign reserves.