GYEONGJU U.S. Treasury Secretary Timothy Geithner on Saturday pressed emerging economies to allow “gradual appreciation” in their currencies following the Group of 20’s agreement to refrain from competitive devaluation.
He also urged major surplus countries to increase domestic demand to help rebalance the global economy.
He made the remarks after the Group of 20 issued a joint statement pledging to “move toward more market determined exchange rate systems’’ and “refrain from competitive devaluation of currencies.”
U.S. Treasury Secretary Timothy Geithner (Yonhap News)
“These commitments should help reduce some of the pressure being experienced by those emerging economies that are appropriately running more flexible exchange-rate systems and have already seen their currencies move significantly higher,” Geithner said.
Geithner said the global economy still faces substantial economic challenges and urged a continued gradual appreciation of emerging-market currencies against their advanced currencies.
In a news conference after the G20 finance chiefs’ meeting, he said surplus countries should move “away from export dependence and toward stronger domestic demand.”
“If the world economy is going to be able to grow at a strong, sustainable rate in the future ... then we need to work to achieve more balance in the pattern of global growth as we recover from the crisis,” he said.
Geithner reaffirmed that the U.S. supports a “strong dollar” and recognizes its “special responsibility” as the holder of the world’s reserve currency to reduce volatility on foreign exchange markets.
On China’s currency, Geithner said it was important that the country continues with very promising efforts to allow a strengthening of the yuan.
By Kim Yon-se and Cynthia J. Kim