251 lines
6.8 KiB
Plaintext
Executable File
251 lines
6.8 KiB
Plaintext
Executable File
finance
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currency
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8080678
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-----
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# G20 struggles to find common ground on currency war, triggers US push for
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trade caps
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## Finance ministers from the Group of 20 nations struggled to agree on how
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to prevent a currency war on Friday, with the United States switching tack to
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focus on a way to rebalance global trade.
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![G20 struggles to find common ground on currencies. US Treasury Secretary
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Timothy Geithner talks with French Finance Minister Christine Lagarde at the
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G20. He wants countries commit to specific trade caps.][1]
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US Treasury Secretary Timothy Geithner talks with French Finance Minister
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Christine Lagarde at the G20. He wants countries commit to specific trade
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caps. Photo: EPA
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By Malcolm Moore in Gyeongju 2:53PM BST 22 Oct 2010
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[Comments][2]
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With China resolutely refusing to allow the yuan to rise more quickly, the US
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shifted the debate on the first day of the G20 summit to address trade
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imbalances, the root issue behind exchange rate clashes.
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Timothy Geithner, the US Treasury secretary, told G20 members they should
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commit to specific trade caps, allowing surpluses and deficits on their
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current account, the broadest measure of trade in goods and services, to be no
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more than 4pc of gross domestic product.
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China's current account surplus was 5.9pc in 2009, having almost halved from
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its peak of 10.6pc in 2007. The US, by contrast, had a current account deficit
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of 3pc last year.
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In a letter to the G20, Mr Geithner called for a "co-operative effort" on the
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issue, but said there would have to be "some exceptions" for countries that
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imported large quantities of raw materials.
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The US plan was seen as a way to side-step a direct confrontation over
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currencies. It was backed by the UK, Korea, Australia and Canada, but
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immediately opposed by large exporters such as Japan and Germany.
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## Related Articles
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* [The G20 Summit in Seoul ][3]
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11 Nov 2010
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* [G20 reaches agreement and vows to avoid currency war][4]
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23 Oct 2010
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* [FTSE 100 shares hit by profit-taking on G20 anxieties][5]
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22 Oct 2010
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* [The G20 is a complete waste of space][6]
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22 Oct 2010
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* [G20 finance ministers plan to head off currency war][7]
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21 Oct 2010
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* [Dollar plummets on talk of $500bn Fed stimulus][8]
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20 Oct 2010
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Rainer Bruederle, the German finance minister, rejected a "command economy"
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approach, while Yoshihiko Noda of Japan said "setting numerical targets would
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be unrealistic".
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India also said the trade caps would be hard to work out, while Russia said
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there would be no numerical limits set in the summit's final statement.
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Mr Geithner also called for G20 countries to refrain from "either weakening
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their currency or preventing the appreciation of an undervalued currency". Mr
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Geithner, who also called for the IMF to monitor the G20's commitments, added:
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"G20 advanced countries will work to ensure against excessive volatility and
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disorderly movement in exchange rates."
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Guido Mantega, the Brazilian Finance minister, who was not at the G20 summit,
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also revealed the Mr Geithner had telephoned him to reassure him that the US
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had no intention of allowing the dollar to weaken further.
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"He guaranteed US policy is not to weaken the dollar, on the contrary, it is
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to strengthen the dollar," said Mr Mantega. "He said the impact of the Fed
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policy was being overestimated. It is difficult, if you weaken the dollar and
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want the Chinese to let the yuan appreciate," he added.
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Mr Mantega's comments helped move the dollar up against the euro, from $1.3918
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to the euro to $1.3895, before weakening later in the day. The dollar also
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steadied to 81.28 against the Japanese yen.
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However, as the first day of meetings closed, there was little sign that
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currency issues would be resolved.
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With scepticism growing that the G20 was a focused enough forum to iron out
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global economic problems, Lee Myung-bak, the South Korean president who is
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hosting the summit, warned ministers that if they did not reach a compromise
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"we may not operate bus, train or aeroplane services to take you back home".
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[X][9] Share & bookmark
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[What are these?][10]
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* Share: [Share][9] [ ][11] [ ][12]
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[Tweet][13]
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http://www.telegraph.co.uk/finance/currency/8080678/G20-struggles-to-find-
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common-ground-on-currency-war-triggers-US-push-for-trade-caps.html
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Telegraph
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## [Currency][14]
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* ### [Finance »][15]
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* ### [Economics »][16]
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* ### [Financial Crisis »][17]
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* ### [Business Latest News »][18]
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* ### [G20 summit »][19]
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In finance
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[![][21] ][22]
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### [Japan prompts first joint currency intervention since 2000][22]
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[![The yen briefly hit record highs against the dollar on Thursday as quake-
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hit Japan's nuclear crisis unleashed a global risk sell-off and talk of
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intervention by the Bank of Japan and the G7. This is how analysts explained
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the spike in the yen.][23] ][24]
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### [Why the Japanese yen has jumped][24]
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[![Euro crisis is far from over - what the experts are saying][25] ][26]
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### [Euro crisis is far from over][26]
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[X][9] Share & bookmark
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[What are these?][10]
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Share:
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* [ ][9]
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* [ ][11]
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* [ ][12]
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* [Tweet][13]
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* Advertisement
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![][27]
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telegraphuk
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