G-20, SEOUL, South Korea—On Friday morning in Korea, representatives of the G-20 nations had apparently moved forward in an agreement on currencies and trade imbalances that has been a focal point of the G-20 meetings in Seoul.
“There has been big progress,” said South Korean President Lee Myung-bak at the first Friday G-20 session, though he did not specify the exact nature of what had been decided upon during the negotiations, according to South Korea’s Yonhap News Agency.
The breakthrough is in negotiators agreeing to seek “more market-determined exchange rate systems,” reported Yonhap, citing a Korean government source. This is essentially what the October G-20 meeting of finance ministers and central bankers in Gyeongju, South Korea, had agreed upon.
This is also in line with a draft of a G-20 leaders’ communiqué that was reported on Wednesday by Dow Jones Newswires, which read, “We will move toward more market-determined exchange-rate systems and enhance exchange-rate flexibility to reflect underlying economic fundamentals.”
President Lee’s morning announcement follows a G-20 representatives’ working dinner on the topic on Thursday, which began with scant hope of agreement and lasted into the night. A more formal agreement on trade and currency issues is expected to be announced by Lee at 4 p.m. Seoul time Friday.
The G-20 meeting of finance ministers and central bankers last month agreed to move toward market-driven exchange rates and reduce excessive imbalances, as well as keep existing imbalances at sustainable levels. But the U.S. Federal Reserve a week later announced that it would pump $600 billion into the U.S. economy to spur growth. With this policy of “quantitative easing,” the United States hopes to drive down the dollar’s value and make U.S. exports more competitive.
Many emerging economies including China and Brazil are against quantitative easing, claiming that it will drive “hot money” into their markets, driving up the values of their currencies, fueling inflation, and increasing the prices of raw materials. Germany also joined in such criticism, saying that quantitative easing would undermine U.S. efforts to get the Chinese regime to stop undervaluing the yuan.
But in a question and answer session with reporters following a speech with President Barack Obama on Thursday, President Lee stood on the side of the United States.
“What’s most important for us and for everyone around the world, including the Americans, is for the U.S. economy to be robust, to recover, and to continue to grow,” he said, according to a White House press release.
Jan Jekielek contributed to this report.
“There has been big progress,” said South Korean President Lee Myung-bak at the first Friday G-20 session, though he did not specify the exact nature of what had been decided upon during the negotiations, according to South Korea’s Yonhap News Agency.
The breakthrough is in negotiators agreeing to seek “more market-determined exchange rate systems,” reported Yonhap, citing a Korean government source. This is essentially what the October G-20 meeting of finance ministers and central bankers in Gyeongju, South Korea, had agreed upon.
This is also in line with a draft of a G-20 leaders’ communiqué that was reported on Wednesday by Dow Jones Newswires, which read, “We will move toward more market-determined exchange-rate systems and enhance exchange-rate flexibility to reflect underlying economic fundamentals.”
President Lee’s morning announcement follows a G-20 representatives’ working dinner on the topic on Thursday, which began with scant hope of agreement and lasted into the night. A more formal agreement on trade and currency issues is expected to be announced by Lee at 4 p.m. Seoul time Friday.
The G-20 meeting of finance ministers and central bankers last month agreed to move toward market-driven exchange rates and reduce excessive imbalances, as well as keep existing imbalances at sustainable levels. But the U.S. Federal Reserve a week later announced that it would pump $600 billion into the U.S. economy to spur growth. With this policy of “quantitative easing,” the United States hopes to drive down the dollar’s value and make U.S. exports more competitive.
Many emerging economies including China and Brazil are against quantitative easing, claiming that it will drive “hot money” into their markets, driving up the values of their currencies, fueling inflation, and increasing the prices of raw materials. Germany also joined in such criticism, saying that quantitative easing would undermine U.S. efforts to get the Chinese regime to stop undervaluing the yuan.
But in a question and answer session with reporters following a speech with President Barack Obama on Thursday, President Lee stood on the side of the United States.
“What’s most important for us and for everyone around the world, including the Americans, is for the U.S. economy to be robust, to recover, and to continue to grow,” he said, according to a White House press release.
Jan Jekielek contributed to this report.
