G-20 Pledge to Refrain From Competitive Devaluations, Draft Says

Group of 20 finance chiefs will reaffirm a pledge to “refrain from competitive devaluation” and will commit to monitoring “possible monetary-policy spillover,” according to a draft statement obtained by Bloomberg News.

The language on currencies in the draft is similar to the last statement released by G-20 officials on Nov. 5, and predates by one day a Feb. 12 statement by Group of Seven officials that commits the major industrial countries to not use domestic policies to target exchange rates.

“We reaffirm our commitment to achieve a lasting reduction in global imbalances through our joint actions to avoid persistent exchange-rate misalignment, refrain from competitive devaluation, resist protectionism in all forms and keep markets open,” the group said in the draft, which is dated Feb. 11.

Russian Finance Minister Anton Siluanov, who is chairing the meetings of G-20 finance ministers and central bankers in Moscow on Feb. 15-16, said today he is pushing for a stronger stance against currency manipulation than the group has adopted in the past. Financial markets whipsawed two days ago as the G-7 issued a statement viewed by investors as accepting a declining yen, only for officials to then split over whether Japan was being singled out.

The draft communique also says the G-20 is “mindful” there could be spillovers of monetary policy between countries and will continue to monitor their impact.

“Monetary policy should be directed toward domestic price stability, while continuing to support economic recovery,” according to the draft. The G-20 will continue to take into account “country-specific circumstances” in determining sustainable levels of debt, while monitoring spillovers between public debt on the financial sector, it said.

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