G-20 Draft Affirms Pledge to Avoid Competitive Devaluations

Group of 20 nations will affirm a commitment to avoid weakening their currencies to gain a trade advantage, according to a draft statement prepared for a meeting this week in Washington, Bloomberg BNA reported.

The statement, seen by a Bloomberg BNA reporter, maintains a February pledge to “move more rapidly toward more market- determined exchange rate systems and exchange-rate flexibility” and to refrain from competitive devaluations. Meetings of finance ministers and central bankers start today.

The initial language suggests G-20 members will withhold direct criticism of Japan’s efforts to rally its economy from 15 years of deflation even after the yen’s 19 percent slide against the dollar in the past six months. Yi Gang, a People’s Bank of China deputy governor, said yesterday that the yuan’s trading band will be widened “in the near future,” a comment that Credit Suisse Group AG said was for a political audience.

Japanese Prime Minister Shinzo Abe’s campaign to end deflation “always carries the risk of triggering criticism from trading partners and it remains a balancing act warranting careful handling,” said Hideo Kumano, chief economist at Dai- Ichi Life Research Institute in Tokyo and a former Bank of Japan (8301) official. “So far, he’s succeeded in the challenge, though there is still a way to go.”

Bloomberg

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