G20 urged to head off war of devaluations
THE Group of 20 nations must avoid currency devaluations aimed at increasing competitiveness and promote more transparency in exchange rates, a senior US Treasury official said.
"The G20 needs to deliver on the commitment to move to market-determined exchange rates and refrain from competitive devaluation," said Lael Brainard, the Treasury's undersecretary for international affairs.
"Global growth is weak and vulnerable to the downside."
She said strengthening demand must be a priority for G20 finance ministers and central bankers meeting in Moscow on Friday.
She said she supports efforts in Japan to end deflation and reinvigorate growth. "It will be important that structural reforms accompany macro-economic policies."
The G7 nations are considering issuing a statement confirming they won't target exchange rates when setting policy as they try to calm concerns that the world is on the brink of a currency war.
Finance officials from the world's key industrial economies have drafted the statement, which is being reviewed by senior policy makers.
The wording combines the traditional backing for market-set exchange rates with a new line that governments do not direct fiscal or monetary policy at driving currencies, one official said.
The push for more aggressive monetary policy by the Prime Minister of Japan, Shinzo Abe, has raised concerns that his government is directly seeking to weaken the yen.
Ms Brainard said China needed to "further boost household demand and reinvigorate the move to a market-determined exchange rate and interest rates".