G20 nations agree to avoid currency war
Moscow, Russian Federation (4E) – G20 nations have pledged that they will not engage in a “currency war” and agreed to defer plans for fresh debt-reduction targets due to concerns about the fragile state of the global economy.
The current noise of a currency dispute, which is similar to previous issues with China, had been sparked by plans of Japan’s new Prime Minister Shinzo Abe to ease monetary policy by weakening the yen aimed to boost inflation and economic activity.
The Abe administration’s policies were spared from criticism in a statement agreed by the G20 financial policymakers in Moscow on Saturday. The grouping is composed of developed and emerging markets that account for 90 per cent of the world’s economy.
A communique agreed by the finance ministers after the meeting stated that member nations will refrain from competitive devaluation and will not use exchange rates for competitive purposes.
The statement largely reflected Tuesday’s statement endorsed by the Group of Seven rich nations — the U.S., Japan, UK, Canada, Germany, France and Italy.
The central bankers and finance ministers have agreed on wording that closely reflected the joint statement by the G7 supporting market-determined exchange rates.
British Chancellor of the Exchequer George Osborne had earlier warned of the economic dangers of countries trying to outdo each by successive devaluations.