UPDATE 2-S.Korea’s Lee hopes for progress on FX at G20

* Lee says accord possible on guidelines, admits

* Obama’s room to negotiate may be hurt by mid-term losses
(Adds quotes, analyst, details)

By Yoo Choonsik and Jeremy Laurence

SEOUL, Nov 3 (BestGrowthStock) – South Korean President Lee
Myung-bak said on Wednesday he hopes G20 leaders will agree on
how to draw up current account “guidelines” aimed at easing
global imbalances but admitted a severe standoff between the
major economies.

Lee, who will host the Nov. 11-12 summit of leaders from
the Group of 20 major economies in Seoul, praised China’s
cooperation in reaching an agreement between the finance
ministers and central bank governors last month to avert a
“currency war”.

“I think countries that are having a severe standoff such
as the United States, Europe and China will be able to reach an
agreement on the basis of the principles adopted in Gyeongju,”
Lee told a televised news conference.

Finance ministers and central bank chiefs from the G20
economies agreed late last month in the South Korean city of
Gyeongju to shun competitive currency devaluations although
they stopped short of setting targets to reduce trade
imbalances. [ID:nTOE69K01G]

The United States had proposed limiting each country’s
current account surplus or deficit within 4 percent of its
annual gross domestic product, but this was resisted by big
exporters like Germany and Japan.

Analysts say however that U.S. President Barack Obama’s
room to negotiate will be severely hampered by losses in the
U.S. mid-term elections where Democrats were swept from power
in the House of Representatives. [ID:nN01179745]

A senior U.S. Treasury official said on Tuesday that U.S.
would seek support from Pacific Rim finance ministers for
“concrete guidelines” to limit trade imbalances this weekend in
hopes that G20 leaders can hammer out final language.

He said the leaders would try to adopt detailed plans on
strengthening the global financial safety nets by diversifying
the funding mechanisms away from the International Monetary
Fund’s lending facilities and helping poor nations develop.

“The development agenda (promoted by South Korea) is aimed
at helping strengthening the growth potentials and the ability
to grow,” he said, referring to his country’s proposal to find
alternative ways of helping develop poor nations.

On the pending ratification of a free trade agreement with
the United States, Lee said the U.S. would be sending an
important message on its commitment to free trade if the two
countries finally advance a pact signed three years ago.

“I believe concluding the South Korean-U.S. FTA carries an
important message on free trade as far as the U.S. position is
concerned,” he said, while reaffirming that he hopes to
finalise the deal through a meeting with Omaba on the sidelines
of the G20 summit. [ID:nTOE6A2016]
(Additional reporting by Jack Kim; Editing by David Chance)

UPDATE 2-S.Korea’s Lee hopes for progress on FX at G20