G-20 Leaders Promise Steps to Avoid Currency War

12 November 2010

President Obama is welcomed to a G-20 dinner in Seoul on Thursday

This is IN THE NEWS in VOA Special English.

Leaders of the world's twenty largest economies met this week in Seoul, South Korea. They agreed to try to let market forces drive currency exchange rates. Their declaration Friday also promised to avoid competitive devaluation of currencies.

A weaker currency lowers the price of a country's exports. That angers other exporters with stronger currencies, and it can lead to so-called currency wars.

Leaders from the Group of 20 urged "advanced economies" to guard against disorderly movements in exchange rates. At the same time, they rejected the idea of setting target amounts for national trade balances.

The United States and South Korea supported the idea. Others, including China, Germany and Japan, opposed it.

Instead, the leaders said they will order their finance ministers to develop a set of "indicative guidelines" early next year. These will measure trade and economic balances, to signal when deficits or surpluses are becoming too large.

President Obama noted that the G-20 leaders made progress in areas like approving reforms for the International Monetary Fund. But he himself failed in efforts to secure a free trade agreement with South Korea. And he made little progress in his push to get China to let the value of its currency rise.