UPDATE 1-Geithner suggests major currencies "in alignment"-WSJ

* U.S. wants G20 to agree “norms” on exchange rate policy

* Geithner eyes numerical targets for current accounts-WSJ

* He suggests dollar, yen, euro “roughly in alignment”-WSJ
(Recasts with dollar comment, adds details, background)

GYEONGJU, South Korea, Oct 21 (BestGrowthStock) – U.S. Treasury
Secretary Timothy Geithner suggested that he sees no reason for
the dollar to sink further against the euro and the yen, saying
these major currencies are “roughly in alignment”, the Wall
Street Journal reported on Thursday.

In an interview with the newspaper, Geithner also
emphasized that the United States was not pursuing a deliberate
policy of devaluing the dollar.

This echoed comments he made on Monday in Palo Alto,
California, saying “No country around the world can devalue its
way to prosperity.” [ID:nN18291636]

In the Journal interview, he referred to three groups of
currencies. In one, he put countries with currencies
“undervalued by any measure” and in the second he put emerging
economies with flexible exchange rates that intervene or impose
taxes to try to reduce risks.

“In the third group, he put “the major currencies, which
are roughly in alignment now,” a suggestion that he sees no
need for the dollar to sink more than it already has against
the euro and yen,” the newspaper reported.

Geithner said he wants the Group of 20 advanced and
emerging economies to agree at meetings in South Korea this
weekend to move toward “norms” on exchange rate policies and
numerical limits for “sustainable” trade surpluses and

“Right now, there is no established sense of what’s fair,”
he told the newspaper ahead of G20 finance leader meetings
starting on Friday in Gyeongju.

“We would like countries to move toward a set of norms on
exchange rate policy,” he said.

On Wednesday, another senior U.S. Treasury official said
the United States at the G20 meetings would press for countries
to reduce global economic imbalances by committing to curb
trade surpluses or deficits and by letting currencies rise more
in response to market forces.

Currency tensions are expected to take center stage at the
G20 meetings, as a decline in the dollar and China’s tightly
controlled foreign exchange regime has put upward pressure on
other emerging market currencies that are allowed to move more

Several countries, including Brazil this week, have taken
steps to stem capital inflows to keep their currencies from
rising and eroding the competitiveness of their exports.

While some criticism has been levelled at U.S. Federal
Reserve monetary easing for weakening the dollar, U.S.
officials are pointing at China’s determination to control its
yuan as the main reason for similar actions by other countries.
They believe the world will be better off if G20 countries can
agree to cooperate more on currency policies.

“When large economies with undervalued exchange rates act
to keep their currencies from appreciating, that compels other
countries to do the same, setting off a dynamic of competitive
nonappreciation,” the senior Treasury official told a news
briefing, referring to China.


Geithner repeated his view that China’s yuan is
significantly undervalued, but if the pace of appreciation
since September were sustained, it would correct the
undervaluation over time.

“If China knew that if it moved more rapidly, other
emerging markets would move with them, it would be easier for
them to move,” Geithner said.

U.S. officials have played down expectations for a major
currency announcement out of the weekend G20 finance meetings.
Any deal is more likely to be announced at a G20 leaders’
summit in Seoul in November.

Geithner sees a G20 currency agreement as an extension of
commitments made in Pittsburgh, Pennsylvania, last year to
rebalance the global economy, with fast-growing exporters
relying more on domestic growth, and big import consumers
increasing their savings rates.

“We’re encouraging our partners to put a little more flesh
on the skeleton of the rebalancing commitment,” Geithner told
the Journal. “We are exploring whether we can agree to commit
to keep the external imbalances to levels that are more
sustainable, making allowances for different kinds of
countries, such as commodity producers.”

China projects that its current account surplus will fall
below 4 percent of GDP in the next three to five years, down
from about 9 percent in 2008. U.S. officials are hoping to make
this a firm commitment.

Tensions over the pace of the yuan’s rise appear likely to
continue. Since China depegged the yuan (CNY=CXFS: ) from the
dollar in mid-June, it has risen about 2.6 percent.

However, China has signaled that the recent faster pace of
yuan appreciation may not be sustained. Chinese exporters could
withstand a further yuan rise of almost 6 percent before they
started to lose money, a Reuters poll showed on Wednesday.

U.S. officials maintain that the yuan is likely undervalued
by some 20 percent.
(Reporting by David Lawder; Editing by Neil Fullick)

UPDATE 1-Geithner suggests major currencies "in alignment"-WSJ