(See GMEET for more on the G-20 summit.)
Nov. 4 (Bloomberg) -- Global leaders toughened their stance on exchange rates by backing a faster transition to market-set currencies and highlighting China’s willingness to allow more flexibility for the yuan.
“We affirm our commitment to move more rapidly toward market-determined exchange-rate systems and enhance exchange- rate flexibility to reflect underlying economic fundamentals,” the Group of 20 said in a statement released after a summit in Cannes, France, today. In a separate document, the policy makers welcomed China’s “determination” to allow the yuan to trade more freely in line with its economy.
The comments mark the strongest language yet on currencies since G-20 leaders began meeting three years ago. A U.S. official highlighted the mention of China today, as the yuan reached a 17-year high after U.S. officials said yesterday that China would commit to a more flexible currency as part of a G-20 plan to spur global economic growth.
China remains open to increased flexibility of the yuan and will continue to “improve” its exchange-rate regime, Zhang Tao, director general of the international department of the People’s Bank of China, said on Nov. 2 ahead of the summit.
The Chinese currency advanced 0.19 percent today to close at 6.3392 per dollar in Shanghai, contributing to a weekly advance of 0.3 percent, according to the China Foreign Exchange Trade System.
Russia was also praised by the G-20 for allowing the ruble to “move more in line with market forces.”
After avoiding the topic of currencies at their first meeting in Washington in November 2008, G-20 leaders have since stepped up calls for more flexible exchange rates without ever naming countries.
At April 2009 talks in London, they agreed to “refrain from competitive devaluation of our currencies,” before saying in Pittsburgh six months later that monetary policies should be set “in the context of market-oriented exchange rates.”
At Toronto in June 2010, the leaders advocated “greater exchange-rate flexibility in some emerging markets” to “reflect underlying economic fundamentals.” They echoed that message a year ago in Seoul.
--Editors: Alan Crawford, James Hertling.
To contact the reporters on this story: Zijing Wu in Cannes at firstname.lastname@example.org; Rebecca Christie in Cannes at email@example.com
To contact the editor responsible for this story: James Hertling at firstname.lastname@example.org