G20 source: dissent on FX norms, no draft statement yet

GYEONGJU, South Korea (BestGrowthStock) – Finance officials from the Group of 20 leading economies are unlikely to reach any accord committing them to abstain from currency devaluation and to caps on current account balances, a G20 source said on Thursday.

The source said talk of such commitments being made at this week’s meeting of finance ministers and central bankers had possibly leaked from a working paper circulated by some of the developed nations.

But the proposal was not finding much favor with India, China and other emerging economies or even Germany, which has a large current account surplus, the source, who has direct knowledge of deliberations at the meeting, said.

G20 finance officials start their formal meetings on Friday, against a backdrop of policy discord and disparate agendas on how best global trade and growth imbalances can be rectified.

U.S. Treasury Secretary Timothy Geithner mooted the idea of some sort of norms being agreed on currencies in an interview with the Wall Street Journal. Separately, there was speculation countries would be asked to commit to limits on current account balances.

“It’s a position paper of the U.S. and some other countries which they have converted into a working paper. The actual drafting of the communique will only begin Friday night after first round of meetings between the finance ministers and central bank governors,” the source said.

The final communique would make a rather “subdued” reference to currencies and current account balances,” he said.

He said India, Germany and some other countries had told the United States on Thursday that there was no point in setting artificial caps on the current account balances.

“We have also opposed any kind of what they are saying should be ‘global fx norms’. Rather we as in the emerging economies including India, China as well as Germany have suggested that there should be structural reforms and currency and current account balance issues should be corrected as part of the reforms package.

“If the US persists with that line, we will oppose it,” the source said.

(Reporting by Abhijit Neogy; Editing by Vidya Ranganathan)

G20 source: dissent on FX norms, no draft statement yet