The G-20 is trying to calm fears of a currency war and will take up currency problems again when leaders meet in November.
Bloomberg: G-20 to Avoid `Competitive Devaluation,’ Prod China,
Group of 20 finance chiefs vowed to avoid weakening currencies to lift exports and left it to a leaders’ meeting next month to flesh out how to further pressure member China to allow faster gains in the yuan.
Finance ministers and central bankers ended talks in South Korea Oct. 23 foreswearing “competitive devaluation” to calm fears of a trade war stemming from using cheaper currencies to spur growth. They called for reduced trade imbalances while stopping short of a U.S. proposal for targets that was aimed at making a yuan advance more palatable to China. Leaders will take up the debate at the Seoul summit on Nov. 11-12.
AP: World stocks up as G-20 vows to avoid currency war,
World stocks rose and the dollar slumped Monday after global finance chiefs vowed to avoid a currency war that could derail the global recovery. With no concrete guidelines to go by, however, investors are wary that this may only prove a temporary truce.
Finance ministers from the Group of 20 developed and emerging countries promised to avoid competitive devaluations — weakening a national currency to help exports and sustain economic recovery — but offered no binding targets for evening out trade imbalances.
(Note – The dollar “slumping” and becoming “weaker” is good. It means that American-made goods will be more competitive in world markets.)
Washington Post, Saturday: G-20 powers agree to Geithner currency and trade plan,
Finance ministers from the world’s major nations agreed to a U.S.-brokered plan for easing tensions over exchange rates and world trade patterns, saying that a “fragile and uneven” economic recovery was at risk if top powers pursued conflicting policies or used the value of their currencies to gain an edge for their exports.
[. . .] The group agreed as it has before that “excessive imbalances” in trade and other relationships should even out over time – requiring countries such as China and Germany to rely less on exports for their economic growth – and the members pledged for the first time to submit to an agreed-upon procedure for measuring progress.The methods of measurement are still to be developed, but the language marks a potential turning point as the G-20 struggles to ensure its agreement over broad principles translates into action. U.S. officials say they intend to push for more detail, including possible timeframes and numerical targets, as the work of the finance leaders is submitted for approval by the G-20 heads of state who gather in South Korea next month.
. . . Countries with “persistently large imbalances,” the agreement states, would undergo closer IMF scrutiny to see if their exchange rates or other policies are preventing progress.
Nothing concrete, picking it up again in a few weeks.
