Article from ny times about the currency war (g-20)
Moving to shore up the “fragile and uneven” recovery, officials from the world’s 20 biggest economies promised Saturday to refrain from weakening their currencies, agreeing to let the markets exert more influence in setting foreign exchange rates.
The officials also decided to give fast-growing countries a greater say at the International Monetary Fund, which monitors nations’ fiscal and monetary policies, an acknowledgment that the fund’s credibility required more representation from these nations. They also strengthened the I.M.F.’s role in assessing whether G-20 members were meeting their commitments.
The finance ministers and central bankers were at a two-day meeting in Gyeongju, South Korea, and their actions represented another step in the effort to bridge the diverging priorities of the leading economies and ease the strain of simmering disputes.
The intense talks — built largely around an agenda the Americans brought to the meeting — yielded more consensus than many officials had expected. In general, the United States refrained from putting more public pressure on China to revalue its currency, preferring instead to emphasize the benefits of reducing trade imbalances.
Seeking to find common ground on currency valuation, officials agreed to “move toward more market-determined exchange rate systems that reflect underlying economic fundamentals.” And they pledged to “refrain from competitive devaluation of currencies” — an effort to calm anxiety over a wave of protectionism in which countries would weaken their currencies to bolster their own exports.
Threats of such a “currency war” have unsettled markets and threatened to hinder a flagging global recovery.
The language adopted Saturday was the strongest yet from the G-20, which operates through consensus and peer pressure but lacks binding authority, following warnings by the United States that rapidly developing countries were trying to keep their currencies