G20 Focuses on Exchange Rate Volatility
Saturday, February 19th, 2011
The communiqué released by G20 finance ministers on Friday urged nations to take measures to ensure exchange rate stability and misalignment, according to Reuters. Additionally, prior requests to manage ‘competitive devaluations’ largely took a backseat during deliberations, according to the same article.
Broadly, the statement from the G20 finance ministers indicated that the G20 countries were dedicated to greater exchange rate flexibility and denoted the importance of improvements in the international monetary system that should be implemented in order to avert unexpected shifts in capital flows and exchange rate fluctuations. The debates grew heated as an argument between the major Chinese exporters and the debt-burdened importers from the US threatened to close negotiations altogether. The argument was largely regarding the timeline as to how soon trade gaps could be eliminated.
This meeting marks the first major G20 meeting under French chairmanship. Notably, China opposed the efforts of the G20 to make exchange rates an indicator to measure economic imbalance. According to Jim Flaherty, Canadian Finance Minister, China has given no indication that they “intended to be more flexible with their currency immediately.” He went on to say that China’s opposition is not just restricted to the exchange rate of its own national currency, but rather about growing imbalances on a global level. China has argued that emerging economies need a buffer in order to help them deal with economic shocks, and thus have rejected any policy adjustments, which might use these measures as indicators of their economic status.
Timothy Geitner, US Treasury Secretary, echoed the concern over China’s currency stating that it remains considerably undervalued, and the real effective exchange rate has only moved slightly in this new period of exchange rate reform.
France has called for a seminar in Shenzhen regarding the reform of the dollar-dominated global monetary order. This meeting will take place in the last three days of March.
Article by Andrew Timm
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
Tags: china , exchange rates , france , g20 , paris , tim geitner
• China to abandon one child policy
• Lower Chinese PMI further weakens the Australian dollar
• Dow Up for Third Consecutive Week
• Goods and Services Price Split Keeping Inflation in Check
• China Anticipated to Test Relaxed Deposit Rates
• US Treasury and the China Currency Manipulation War
• China and India Increase Voting Rights in World Bank
• Are Copper Prices Ready to Fall as Investor Interest Slows?
• General Electric (NYSE:GE) in "Country to Company" Relationship to China
• Australian Foreign Minister Stephen Smith Says Verdict against Rio Tinto's (ASE:RIO) 'Hu' Could Harm Business Ties
• Toyota Stops Production in Britain and France for 9 Days on Recall Issues
• Has Google (NASDAQ:GOOG) China Strategy Backfired?
• Google (Nasdaq:GOOG), Microsoft (Nasdaq:MSFT) and China
• World Bank Recommends China Tighten Monetary Policy, Increase Exchange Rate
• Refinancing what is it?
• When did oil become a traded commodity?
• What bank has the highest interest rate ...
• How many mutual funds exist?
• What is Underinsured Motorist coverage ?
• Where is the most expensive real estate ...
• Which are the best mortgage companies in...
• How safe are reits?