GYEONGJU, South Korea — Global finance figures get another chance this week to defuse international currency tensions as a festering dispute over exchange rates overshadows debate about reforming the world economy.
Finance ministers and central-bank governors from the Group of 20 rich and emerging nations, along with key officials from international finance and lending organizations, meet today and Saturday in the South Korean city of Gyeongju. Their deputies met Thursday.
The gathering comes two weeks after they failed at a meeting in Washington to iron out differences that have led to fears that the world could descend into a so-called currency war that causes another downturn.
In such a scenario, countries devalue their currencies to gain a competitive advantage over competitors in a less- than-robust world economy that has yet to fully recover from the effects of the global financial meltdown two years ago. Trade barriers are erected in response, hitting international commerce and sending the economic recovery into reverse.
The Gyeongju meeting also offers the last chance to calm such anxieties ahead of a summit of the group’s leaders scheduled next month in Seoul.
David Cohen, head of Asian forecasting at Action Economics in Singapore, said the finance meeting represents a “real test” for the G-20 given the prominence it has assumed in leading the global economy.
“I think there’s a lot of pressure on them,” Cohen said. “I think they understand that it’s in no country’s interest to revert to a currency war, to all the protectionism that would accompany that.”
