G20 to avoid currency crisis

S KOREA: The Group of 20 nations will vow to "refrain from competitive undervaluation" of their currencies, according to a draft communique issued ahead of a Finance Ministers' and central bankers' meeting.

The draft suggests the world's 20 leading economies may this weekend take a clear stand against a global currency war amid concerns governments have or are planning to step into foreign exchange markets to help their exporters.

The G20 will "move towards (a) more market-determined exchange-rate system", the draft said, reflecting an often-used US expression meant to discourage countries from intervening in currency markets. But, perhaps reflecting the concerns of Asian and other export-reliant economies about rapid rises in their currencies, the draft said the G20 would minimise "adverse effects of excess volatility and disorderly movements in exchange rates".

The statement could change substantially as debate on it is just beginning, Dow Jones Newswires said. The dispute over China's allegedly undervalued yuan, the subject of heated complaints from the United States and the European Union, threatens to overshadow other agenda issues at a November 11-12 G20 summit in South Korea. China has let the yuan rise more than 2.5 percent against the dollar since early September. Export-reliant economies especially in Asia have seen their currencies soar and potentially destabilising floods of foreign capital pour in.

US officials have accused China of keeping the yuan artificially undervalued to give its companies an unfair trade advantage, while China has accused the United States of pursuing a loose monetary policy. US Treasury Secretary Timothy Geithner said he would push his G20 counterparts to "rebalance" the global economy away from US consumption, and push "fair" currency rules. Seoul, AFP