G20 will vow to avoid forex undervaluation
G20 nations will pledge to "refrain from competitive undervaluation" of their currencies, according to a draft statement before a weekend meeting of finance ministers.
The draft obtained by Dow Jones Newswires suggests the world's top economies are eager to allay fears of a currency war, even if no immediate solution to the forex disputes is in sight.
The Group of 20 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 it also said the group would minimise "adverse effects of excess volatility and disorderly movements in exchange rates" -- apparently reflecting concerns of Asian and other export-reliant nations about rapid rises in their currencies.
The statement could change following the meeting Friday and Saturday of ministers and central bank governors in the southeastern South Korean city of Gyeongju.
But a G20 official with the host nation said a reference to currencies would likely remain and the draft wording on the issue was seen as neutral.
Finance ministers from the Group of Seven will meet Friday on the sidelines of the main meeting, officials said, and will probably discuss the currency issue.
The G7 groups Canada, France, Germany, Italy, Japan, Britain and the United States.
South Korea's Vice Finance Minister Yim Jong-Yong said he believes agreement will be reached at some point. "China is making its own efforts, for instance by raising interest rates," Yim said.
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