Currency policies continued to dominate the agenda at the G20 summit in South Korea, and there were fears that a meeting in Seoul could result in worsening relations between the US and China about so-called “currency wars”.
However, leaders of the G20 group of the world’s major economies have agreed to avoid “competitive devaluation” of currencies after some difficult talks.
Mark O’Sullivan, director of dealings at Currencies Direct, commented, “As another G20 draws to a close it has become even more apparent that the real power to solve the current problem of global imbalances lies with the G2, namely China and the US.
“The failure to agree to any definitive action should come as no surprise to the currency markets, and the vague set of indicative guidelines issued in the final communiqué really once again underlines how little effect the G20 can have on the current problems the global economy faces.
“With the US stating that it is not embarking on a policy to weaken the US dollar, and China giving only vague indications of how and when a major revaluation of the Yuan will take place, the prospect of further currency volatility will remain for some time to come.”