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G20 vow over currency devaluations

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Finance ministers and central bank governors from the G20 group are meeting in South Korea (AP)

Finance ministers and central bank governors from the G20 group are meeting in South Korea (AP)

Finance ministers and central bank governors from the G20 group are meeting in South Korea (AP)

The G20 group of leading advanced and emerging countries say they have agreed to avoid potentially debilitating currency devaluations and will pursue policies to reduce global imbalances that threaten the economic recovery.

The G20 said in a statement that it will "move towards more market determined exchange rate systems" and "refrain from competitive devaluation of currencies".

The statement also said that the G20 agreed to give developing nations more say at the International Monetary Fund, part of what it described as "an ambitious set of proposals to reform the IMF's quota and governance".

The statement came at the end of a meeting of G20 finance ministers and central bank governors meeting in the South Korean city of Gyeongju, held ahead of a summit of leaders next month.

The agreement comes amid fears that nations were on the verge of a so-called currency war in which they would devalue currencies to gain an export advantage over competitors - causing a rise in protectionism and damaging the global economy.

"Our co-operation is essential," the statement said. "We are all committed to play our part in achieving strong, sustainable and balanced growth in a collaborative and co-ordinated way."

The agreement, which includes no specific numerical commitments, appeared to be a step forward from a similar meeting two weeks ago in Washington when finance officials failed to resolve differences.

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US Treasury Secretary Timothy Geithner had pushed in a letter to G20 members for a commitment to polices that would reduce current account and trade imbalances "below a specified share" of gross domestic product "over the next few years".

The statement said that large imbalances - such as China's vast trade surplus with the rest of the world - would be "assessed against indicative guidelines to be agreed". Geithner's proposal had drawn resistance from export-reliant countries such as Japan which called it "unrealistic".


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