EU urges G20 to act to avoid currency war

BRUSSELS: European Union leaders urged their Group of 20 counterparts Friday to avoid a damaging currency war so as to prevent any return of damaging 1930s style trade protectionism.

Leaders adopted a declaration insisting that the G20 of major and emerging powers use their summit in South Korea next month to "avoid engaging in exchange rate moves aimed at gaining short-term competitive advantage."

The text "stresses the necessity to avoid all forms of protectionism" so as not to endanger the global economic recovery.

The call comes amid growing currency tensions, notably between the United States and China over the value of the yuan which Washington says is kept deliberately undervalued to boost Chinese exports at its expense.

Europe has voiced similar fears while Japan, and other Asian countries, recently moved to weaken their currencies to protect exports, sparking concerns of a return to the 'beggar-thy-neighbour' policies at the heart of the 1930s Great Depression.