Friday, February 15 11:37:10
G20 officials struggled to find a common form of words on currency manipulation ahead of a summit today at which divisions within the group over growth versus austerity looked set to flare back into life.
The head of the European Central Bank criticised wrangling over currencies ahead of the meeting of Group of 20 financial leaders where Japan is expected to escape any censure for its expansionary policies.
Speaking in Moscow, ECB President Mario Draghi said recent sparring over currencies was "inappropriate, fruitless and self-defeating" and U.S. Treasury official Lael Brainard warned against "loose talk".
Draghi also said the euro's exchange rate was in line with long-term averages, suggesting little alarm yet about its recent climb choking off prospects of economic recovery.
The currency market was thrown into turmoil this week after the Group of Seven powers - the United States, Japan, Germany, Britain, France, Canada and Italy - issued a joint statement stating that domestic economic policies must not be used to target currencies.
Tokyo said that reflected agreement that its aggressive monetary and fiscal policies were appropriate but the show of unity was shattered by off-the-record briefings critical of Japan.
A meeting in Moscow of finance officials from the G20 nations, which account for 90 percent of the world's gross domestic product and two-thirds of its population, looked likely to be dominated by Japan's expansive policies that have driven down the value of the yen.
But there appeared to be no consensus to demand any action, not least because others such as the United States have also printed money at a furious rate.
Host Russia's finance "sherpa", Deputy Finance Minister Sergei Storchak, said the drafting discussion was proving difficult, but the final text would not single out Japan for criticism.
"There is no competitive devaluation, there are no currency wars," Storchak told reporters. "What's happening is market reaction to exclusively internal decision making."
Australian Treasurer Wayne Swan indicated support for Japan's monetary policy saying "everybody's got a stake" in its ability to foster growth.
And Indonesia, one of the rising Asia-Pacific economies, said it was also less concerned about the exchange rate of the yen than about Japanese growth.
"If the Japanese increase their domestic demand it will help Indonesia, especially from the export side," said Hartadi Sarwono, deputy central bank governor. (C ) Reuters