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G20 determined to enhance forex flexibility-draft
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G20 determined to enhance forex flexibility-draft
UPDATE 1-G20 determined to enhance forex flexibility-draft
8:36pm EDT
* G20 draft toughens language on exchange rates
* Draft urges more rapid exchange rate flexibility
* Draft stresses 'determination' to act: G20 sources
By Isabel Versiani and Lesley Wroughton
CANNES, France, Nov 2 (Reuters) - A draft G20 communique commits to move "more rapidly" toward greater exchange rate flexibility, toughening language that generally is aimed at China's rigid currency regime.
G20 sources said besides the stronger push toward market-determined exchange rates, the draft also includes language on reducing excessive reserve accumulation.
The last G20 communique in Seoul, South Korea, in November 2010 called for "moving toward more market-determined exchange rate systems, enhancing exchange rate flexibility to reflect underlying economic fundamentals..."
The current draft being worked on adds extra emphasis on the need for countries like China to be more responsive to market forces.
The G20 has been advocating for some time that countries with big trade surpluses, like China, whose currencies are undervalued, have to do more to help rebalance the global economy by encouraging more consumption at home.
One G20 source said the draft stresses the group's "determination" to enhance currency rate flexibility, slightly stronger language than in past statements that used the word "commitment".
The sources said the changes in language indicate a greater readiness on the part of China to allow its yuan currency to appreciate faster.
The draft -- which does not name specific countries -- still needs to be approved by leaders from the 20 major economies, the sources told Reuters on the eve of a heads of state summit in the French Riviera resort of Cannes where China's policy on its yuan currency is likely to be discussed.
The source also said there was no agreement yet on how to bolster the International Monetary Fund's resources so it can help stem the euro zone's debt crisis.
Another G20 official said the language on foreign exchange was attached to an annex on balanced and sustainable growth. The source identified it as an early draft of the "Cannes Action Plan".
The official said if the tougher language was to stay in the communique, "the Americans are going to have to fight for it and we're not convinced they will."
http://www.reuters.com/subjects/g20
8:36pm EDT
* G20 draft toughens language on exchange rates
* Draft urges more rapid exchange rate flexibility
* Draft stresses 'determination' to act: G20 sources
By Isabel Versiani and Lesley Wroughton
CANNES, France, Nov 2 (Reuters) - A draft G20 communique commits to move "more rapidly" toward greater exchange rate flexibility, toughening language that generally is aimed at China's rigid currency regime.
G20 sources said besides the stronger push toward market-determined exchange rates, the draft also includes language on reducing excessive reserve accumulation.
The last G20 communique in Seoul, South Korea, in November 2010 called for "moving toward more market-determined exchange rate systems, enhancing exchange rate flexibility to reflect underlying economic fundamentals..."
The current draft being worked on adds extra emphasis on the need for countries like China to be more responsive to market forces.
The G20 has been advocating for some time that countries with big trade surpluses, like China, whose currencies are undervalued, have to do more to help rebalance the global economy by encouraging more consumption at home.
One G20 source said the draft stresses the group's "determination" to enhance currency rate flexibility, slightly stronger language than in past statements that used the word "commitment".
The sources said the changes in language indicate a greater readiness on the part of China to allow its yuan currency to appreciate faster.
The draft -- which does not name specific countries -- still needs to be approved by leaders from the 20 major economies, the sources told Reuters on the eve of a heads of state summit in the French Riviera resort of Cannes where China's policy on its yuan currency is likely to be discussed.
The source also said there was no agreement yet on how to bolster the International Monetary Fund's resources so it can help stem the euro zone's debt crisis.
Another G20 official said the language on foreign exchange was attached to an annex on balanced and sustainable growth. The source identified it as an early draft of the "Cannes Action Plan".
The official said if the tougher language was to stay in the communique, "the Americans are going to have to fight for it and we're not convinced they will."
http://www.reuters.com/subjects/g20
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