(Updates with China in third paragraph. See EXT4 for more on the euro-area financial crisis and click GMEET <GO> for more on the G-20 meeting.)
Oct. 15 (Bloomberg) -- The Group of 20 will refrain from toughening language on currency flexibility in its statement at the conclusion of a meeting of finance chiefs in Paris today, said an official from a G-20 nation.
The communique -- the drafting of which ended 7:30 a.m. Paris time -- will mention the euro region’s sovereign debt crisis, said the official, who spoke on condition of anonymity, citing his government’s policy. The G-20 has yet to find consensus at this meeting of finance ministers and central bankers on communique language on the International Monetary Fund’s surveillance role and the introduction of a financial transactions tax, the official said.
China, which has been criticized for not allowing the yuan to appreciate more, said yesterday that the current priority is fixing Europe’s debt crisis. The U.S. yesterday postponed a report on the exchange-rate policies of its trading partners, including China, until after global meetings scheduled for this month and next.
Treasury Secretary Timothy Geithner has been pushing China to allow its currency to strengthen, saying that would help support global growth, while avoiding actions that could cause friction with the world’s No. 2 economy and the second-largest U.S. trade partner.
The G-20 official said China had given no signal in Paris that it’s prepared to allow the yuan to appreciate more rapidly.
China’s reluctance to allow more flexibility in its currency has been a “persistent thorn,” Canadian Finance Minister Jim Flaherty said in an interview with Bloomberg Television yesterday, adding that a move in this direction would be in the Asian country’s interests.
“There needs to be a recognition that flexibility of the currency also benefits China,” Flaherty said. “Inflexible currencies endanger free trade, ultimately, because they lead to protectionist sentiment.”
When G-20 finance chiefs last met on Sept. 23 in Washington, they maintained their traditional view “that excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability.” They added that emerging markets would contribute more to the global economy by spurring domestic-led growth and that would be easier if they allowed “enhanced exchange rate flexibility to reflect economic fundamentals.”
Japanese Finance Minister Jun Azumi, who at recent gatherings has voiced concern about the impact the stronger yen will have on Japan’s economy, said today he wants his nation’s views reflected in the G-20 statement.
--With assistance from Mark Deen, Simon Kennedy, Helene Fouquet, Cheyenne Hopkins, Arnaldo Galvao, Gonzalo Vina, Theophilos Argitis, Toru Fujioka, Simone Meier and Victoria Ruan in Paris and Matthew Brockett in Frankfurt. Editors: Matthew Brockett, Craig Stirling
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