World Finance Leaders Seek To Avoid Currency Clash

Lates News About Update World Finance Leaders Seek To Avoid Currency Clash, Global finance chiefs sought on Friday to prevent tensions over currency valuations from derailing a fragile economic recovery, and stressed they must work together to find ways to rebalance global growth. Ministers from the Group of 20 nations repeated a call for export powerhouses, such as China, to spend more at home so indebted countries, like the United States, can rebuild their finances without risking a still-fragile global recovery.

The International Monetary Fund, heading into evening talks with the Group of Seven rich countries, was seeking support for a more active role in monitoring the world’s major economies.

Officials worry that a weak U.S. dollar and relatively strong currencies elsewhere could push nations into a round of currency depreciations to help their exports.

The dollar fell to a 15-year low against the yen on Friday after a U.S. report of more job losses cemented expectations of a further loosening in an already-easy U.S. monetary policy.

The uneven pattern of global growth has seen U.S. interest rates cut to nearly zero, driving capital into emerging markets and prompting talk of a “currency war.” At the same time, China has allowed its yuan currency to rise only slowly.

“I’m not in the mind or in the mood for war, this is totally inadequate, inappropriate and unnecessary,” French Finance Minister Christine Lagarde said.

The United States urged the IMF to act as a more forceful global overseer. Finance chiefs were working toward giving the Fund a redefined role, possibly by the time G20 political leaders meet in Korea in November.

The IMF’s managing director, Dominique Strauss-Kahn, sought support for a “systemic stability initiative” to keep a closer watch on the largest economies and ensure they do not put the world in danger of financial crisis again.

He seemed to be winning some allies. Svein Gjedrem, a Norwegian central bank governor, speaking on behalf of Nordic and Baltic countries, said he supported developing an IMF-coordinated framework.

U.S. Treasury Secretary Timothy Geithner called on the IMF to “speak out effectively about challenges and marshal support for action.”

Taking a jab at China, Geithner complained that foreign exchange intervention by countries trying to keep undervalued currencies from appreciating threatened the global recovery.

China pushed back by saying it will move ahead with exchange-rate reforms at its own pace.

“We still think China needs a market-based exchange rate regime,” China’s central bank governor, Zhou Xiaochuan, said. “I think the difference is that for China, we view it as gradualism, a gradual way, rather than shock therapy.”