Tags: US | G-20 | Forex | Moves

US Keeps up Pressure on G-20 Over Forex Moves

Wednesday, 17 Apr 2013 06:06 PM

U.S. Treasury Secretary Jack Lew warned his partners in the Group of 20 on Wednesday against the perils of "beggar thy neighbor" currency devaluations, picking out China for special mention, but noted Japan was also on Washington's radar screen.

Speaking on the eve of a G-20 meeting here, Lew also underlined the importance of stronger demand in Europe, keeping up pressure on Germany to loosen policies and provide more support for weaker eurozone members in the bloc's south.

"It is imperative that all G-20 countries follow through on their recent commitment not to target exchange rates for competitive purposes," he told an audience at Johns Hopkins University's School of Advanced International Studies.

Declassified: ‘Financial War’ Could Wipe Out 50% of Your Wealth’

G-20 finance ministers and central bankers are expected to confirm a February pledge to avoid competitive devaluations at their gathering here on Thursday and Friday on the sidelines of the spring meetings of the International Monetary Fund and World Bank.

Since the G-20's February commitment, the Bank of Japan has pledged to inject $1.4 trillion into Japan's economy over the next two years in an effort to boost inflation to 2 percent.

This has sharply undercut the value of the yen on foreign exchange markets, pushing it to multi-year lows against the dollar and euro.

In answer to a question, Lew made clear that the United States was keeping tabs on the BOJ's actions for signs that it had strayed into currency intervention territory.

"We do need to encourage growth in demand, and it should not be aimed at targeting exchange rates, and we watch closely," he said, echoing the line taken by the U.S. Treasury in its semi-annual currency report on Friday.

"Japan has had problems with domestic demand for some time, and to the extent that they are targeting their policies at encouraging domestic demand with domestic tools, we think that is very much consistent with what we and the other G-7 countries agreed to just a few weeks ago in Moscow," Lew said.

He was more direct in his criticism of Beijing, a vital but sometimes uneasy U.S. partner whom Washington frequently presses to allow its yuan currency to rise on foreign exchange markets, but has also declined to label as a currency manipulator.

"We are concerned that in recent months, movement towards more currency flexibility appears to have slowed and the pace of China's intervention in the market has picked up," Lew said.

Declassified: ‘Financial War’ Could Wipe Out 50% of Your Wealth’

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Economy
U.S. Treasury Secretary Jack Lew warned his partners in the Group of 20 on Wednesday against the perils of beggar thy neighbor currency devaluations, picking out China for special mention, but noted Japan was also on Washington's radar screen.
US,G-20,Forex,Moves
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2013-06-17
Wednesday, 17 Apr 2013 06:06 PM
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