G-20 Pledges to Avoid Devaluations in Push to Defuse Global Trade Tensions

Relatively low currency values make a nation's exports more attractive for global customers. Before global recession struck, the US and other nations protested artificially low values of China's currency. Heeding the warnings, China insisted on a gradual rise in value. To counter global recession and boost domestic spending, the US and others pumped currency into markets, essentially decreasing the value of their respective currencies. Other nations are tempted to manipulate currencies to boost exports. G-20 finance chiefs have pledged to prevent competitive devaluation, allowing the market to set exchange rates, report Simon Kennedy and Eunkyung Seo for Bloomberg: “It was the first time the finance officials made a joint stance on exchange rates as they sought to end concern that nations from the U.S. to China are relying on cheap currencies to spur growth, risking a protectionist backlash.” Juggling an array of imbalances, G-20 chiefs recognize that one nation's difficulties or manipulations can swiftly spread economic crisis. – YaleGlobal