South Korea says G20 set tougher fx tone

GYEONGJU, South Korea (BestGrowthStock) – A change in language in the G20 that emphasizes commitment to “market determined” exchange rates rather than “market oriented” exchange rates represents a significant toughening of the message from the prior summit, a top South Korean adviser told Reuters

Hyun Song Shin, who advises President Lee Myung-bak, said in an interview on Saturday after the G20 summit ended that agreement on currencies and reforms of the International Monetary Fund had been the toughest part of the negotiations.

“In the Toronto G20 (summit) it was ‘market oriented’, today we said ‘market determined’ and that is a much stronger statement,” Shin said.

Shin said that the United States, which was criticized strongly by Germany for the effect of its quantitative easing policy in weakening the dollar was well aware of the intent of the G20 as the communique included a call for countries with reserve currencies to be vigilant against excess volatility.

“I think the U.S. is getting the message loud and clear and this is why we have this language in the communique,” he said.

Leaders of the G20 will gather in the South Korean capital Seoul to hammer out more agreements, Shin said, and would set “indicative” guidelines for current account balances and stress a range of macro-economic measures.

“From the Chinese point of view this really addresses their argument that imbalances are not simply about the exchange rate and it gives very many more policy tools to address the imbalances,”

(Reporting by David Chance; Editing by Tomasz Janowski)

South Korea says G20 set tougher fx tone