Currency Manipulators Check Global Growth, Australia’s Swan Says

Governments that manipulate their currencies are a hindrance to global growth, Australian Treasurer Wayne Swan said at the meeting of Group of 20 finance ministers in Moscow.

“Market-based exchange rates, fiscal and monetary policies supporting jobs and growth; that’s the core of the G-20 agenda,” Swan said in a Bloomberg Television interview yesterday. “To have people artificially target their exchange rates completely repudiates that approach.”

Swan and his peers in Moscow have sharpened their stance against governments trying to influence exchange rates, as they seek to tame speculation of a global currency war without singling out Japan for criticism. With the yen near its lowest level against the dollar since 2010, policy makers are attempting to soothe concern that some countries are trying to weaken exchange rates to spur growth through exports.

Swan, who has been attempting to reduce the negative effects that the high Australian dollar has had on domestic exports and the manufacturing and service industries, declined to specify that Japan had manipulated the yen to his nation’s detriment.

The yen’s devaluation was “a matter for the market,” he said. “The Japanese approach is one to stimulate their domestic economy. That is also good for the global economy.”

Two Speeds

Australian policy makers are aiming to rebalance Australia’s two-speed economy, where mining regions in the north and west thrive off of Chinese demand while manufacturers and retailers in the south and east struggle under the strength of the local currency.

Prime Minister Julia Gillard, whose ruling minority Labor government trails in polls ahead of the Sept. 14 election, announced a A$1 billion program in Melbourne today designed to spur manufacturing. It included A$500 million to establish 10 “industry innovation precincts” and A$350 million toward the Innovation Investment Fund in a bid to boost start-up companies.

Demand for Australia’s resources such as iron ore, coal and natural gas has helped drive up Australia’s currency 27 percent since June 2010. Still, in the past year, weaker commodity prices and the elevated currency have prompted miners including BHP Billiton Ltd. to put off projects and cut jobs, while a construction slump forced building-materials company Boral Ltd. to reduce payrolls.

G-20 finance ministers were also starting to look at ways to close loopholes that allow multinational companies to avoid or reduce their tax payouts, Swan said.

“It is clear there are some multinational companies that are simply not paying tax,” he said. “What we need is a global approach to dealing with this problem. If the revenue is being deliberately reduced, and people are not paying their fair share of tax, that puts a great burden on taxpayers in those countries and indeed on taxpayers around the world.”