Group of 20 vows to avoid currency devaluations

GYEONGJU, South Korea — Global finance leaders, under pressure to show unselfishness in their economic policies, agreed Saturday to boost cooperation on rebalancing the world economy to help defuse tensions that had sparked fears of damaging trade conflicts.

The Group of 20 vowed to avoid potentially debilitating currency devaluations and reduce trade and current account imbalances, amid a growing recognition that restructuring the world economy is necessary to accommodate the greater role played by fast-growing China and other developing economies.

G-20 finance ministers and central bank governors met for two days in the South Korean city of Gyeongju ahead of a summit of their leaders in Seoul next month. Just two weeks ago, a G-20 meeting in Washington failed to resolve differences that had led to fears of a possible trade war that could trigger another economic downturn.

Nations in Asia and other regions have been trying to stem strength in their currencies amid sustained weakness in the U.S. dollar out of fear their exports will become less competitive in world markets. At the same time, China's currency, the yuan, has been effectively pegged to the greenback, provoking criticism that it is being kept artificially low and giving China's exporters an unfair advantage.

Asia relying less on exports for growth is seen as one of the adjustments that nations should make to ensure more stability in the global economy and markets. Stronger currencies, meanwhile, would make imported goods cheaper and boost local spending as a contributor to economic growth.

The G-20, which accounts for about 85 percent of the global economy, said in a statement that it will "move towards more market determined exchange rate systems" and "refrain from competitive devaluation of currencies." It also vowed to cooperate on reducing "excessive imbalances."

"I think it's fair to say for the first time we see the major economies come together and recognize that excess imbalances that persist over a period of time that can threaten growth and financial stability need to bring about adjustments in policies," U.S. Treasury Secretary Timothy Geithner told reporters.

The G-20 includes both rich countries such as the U.S. Japan and Germany as well as emerging ones like China, India and Brazil. It assumed the role of global economic leader following the 2008 financial crisis.

The G-20 also released proposals to give developing nations more say at the International Monetary Fund, part of what it described as an ambitious retooling of the lending institution to make it more representative of shifts in the global economy.