G20 to avoid currency undervaluation: draft communique

SEOUL: The Group of 20 nations has vowed to "refrain from competitive undervaluation" of their currencies in a draft communique issued ahead of the weekend's meeting of finance ministers and central bankers.

The draft suggests the world's 20 leading economies may take a clear stand against a global currency war amid concerns governments have or are planning to step into foreign exchange markets to give their exporters a trade advantage.

The G20 will "move towards (a) more market-determined exchange-rate system," the the draft said, reflecting an often-used US expression meant to discourage countries from intervening in currency markets.

But, perhaps reflecting concerns of Asian and other export-reliant economies about rapid rises in their currencies, the draft said the G20 would minimise "adverse effects of excess volatility and disorderly movements in exchange rates".

The statement could change substantially as debate on it is just beginning, Dow Jones Newswires said.

The dispute over China's allegedly undervalued yuan, the subject of heated complaints from the United States and the European Union, threatens to overshadow other agenda issues at the November 11-12 meeting in South Korea.

South Korean President Lee Myung-Bak has warned fellow G20 leaders that failure to settle currency disputes could fuel protectionism and damage the world economic recovery.