G20 will not take side over yuan
Seoul (AsiaNews/Agencies) – Top financial officials from the Group of 20 will not intervene in the bitter confrontation opposing the United States and China over the yuan. Any decision about will be taken at next month’s meeting of heads of state and governments in South Korea.
On Saturday, G20 finance ministers and central bank governors ended talks in South Korean city of Gyeongju foreswearing “competitive devaluation” as they sought to calm fears of a trade war stemming from the fear that cheaper currencies might be used to spur growth. By not taking any difficult decision, they have not however stopped the slide of the US dollar against the yuan.
“Tensions may be reduced in the short term, but in the longer term there are still imbalances,” said Mansoor Mohiuddin, the Singapore-based head of global currency strategy at UBS. The currency trader expects the yuan to reach 6.55 per dollar by year-end, an appreciation of less than 2 per cent.
Things might change with next week’s meeting of the Federal Reserve when the US central bank will decide whether to buy more assets, a step that may undermine the dollar and push Beijing to make the yuan more expensive, something criticised by the G20.
“It’s the wrong way to try to prevent or solve problems by adding more liquidity,” German Economy Minister Rainer Bruederle said. “Excessive, permanent money creation in my opinion is an indirect manipulation of an exchange rate.”
China and the United States must nevertheless tackle the issue. US Treasury Secretary Timothy F. Geithner was in Qingdao (China) after visiting Seoul. In the Chinese city, he met Deputy Prime Minister Wang Qishan, and said that he was optimistic that China will “continue to move” on the yuan.
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