UPDATE 1-S.Korea’s Lee sees peer pressure enforcing G20 deal

* Indicative guidelines to be achieved at Nov. G20 summit

* S.Korea to continue macro-prudential steps on capital
flows
(Adds more comments from the interview transcript)

SEOUL, Nov 6 (BestGrowthStock) – South Korean President Lee
Myung-bak is counting on “peer pressure” to enforce any
currency deal made among the leaders of the Group of 20 nations
next week, the Wall Street Journal reported in its online
edition on Saturday.

Lee said in an interview that any deal to be reached at the
Nov. 11-12 G20 summit in Seoul would not be enforceable in the
way trade decisions were enforced by the World Trade
Organization.

“There aren’t any legal obligations,” he was quoted as
saying.

But the months of discussion among G20 countries would
produce “a peer-pressure kind of effect on these countries”
that violated the deal, he told the newspaper.

“There is a common understanding that if we do not work
among ourselves, we fear we will return to protectionist
measures.”

G20 finance chiefs agreed last month in the South Korean
city of Gyeongju to shun competitive currency devaluations and
to adopt “indicative guidelines” for current account balances.
[ID:nTOE69M004]

Lee said the leaders of the 20 developed and emerging
economies would reach an agreement on indicative guidelines at
next week’s summit to keep current account imbalances at a
sustainable level.

“(We) will discuss all mechanisms and measures that we can
adopt to achieve mutual goals. I am optimistic that (we) will
reach an important agreement that will show progress,” he said,
according to the interview transcript distributed by the
presidential house.

The president expected the U.S. Federal Reserve’s new asset
buying programme announced this week to have an effect on
exchange rates around the world, but said Washington was not
believed to be pursuing a strategy of competitive devaluation.

“It was more in line with the urgency they were feeling
within the U.S. (about) the very slow pace of the recovery,” he
said.

In response to a question about any policy action against
hot money inflows, Lee said his country would continue to use
macro-prudential measures to constrain excessive volatility and
stabilise financial markets, without elaborating.
(Reporting by Kim Yeonhee; Editing by Andrew Marshall)

UPDATE 1-S.Korea’s Lee sees peer pressure enforcing G20 deal