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Watered-down currency deal ends G20 summit

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Watered-down currency deal ends G20 summit


The summit is over but do the leaders of the G20 really have the right to smile?

The deal reached in Seoul to tackle trade imbalances has been slammed as a bare minimum by critics.

However US President Barack Obama has given a positive assessment, reporting real progress, amid Washington’s so-called currency war with China.

“We agreed that exchange rates must reflect economic realities,” Obama told a news conference. “Just as the major advanced economies need to keep working to preserve stability among reserve currencies, emerging economies need to allow for currencies that are market-driven. This is something I raised yesterday with President Hu of China and we will continue to closely watch the appreciation of China’s currency. All of us need to avoid actions that perpetuate imbalances and give countries an undue advantage over one another.”

Leaders vowed to move towards market-determined exchange rates, a reference to China’s tightly managed yuan that the US says is undervalued. And they pledged to shun competitive devaluations, addressing other countries’ concerns that the US Federal Reserve’s easy-money policy was aimed at weakening the dollar.

The G20 is seeking to recapture a unity forged at the start of the financial crisis in 2008.

Our correspondent in Seoul, Seamus Kearney, said:
“This is being described as the longest-ever final communique to come out of a G20 summit, running to 22 pages – a sign that South Korea made sure that all the main points were covered. Now the hard part will be to turn these words into concrete action and convince critics that there was enough effort to seek cooperation and consensus.”

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