News / Asia

Finance Ministers, Bank Governors Meet to Avert Currency War

South Korean police officers patrol at the Gimpo Airport in Seoul, South Korea. South Korean police will go on high alert and mobilize a record 50,000 officers to thwart possible threats from North Korea. international terrorists and anti-globalization d
South Korean police officers patrol at the Gimpo Airport in Seoul, South Korea. South Korean police will go on high alert and mobilize a record 50,000 officers to thwart possible threats from North Korea. international terrorists and anti-globalization d

Finance ministers and central bank governors from the 20 largest economies are gathering in South Korea as concerns grow about the possibility of a currency war.

Starting Friday, the economic policy makers of the top 20 economies will spend two days trying to reach agreements on the global financial system.

High stakes

Economics Professor Joshua Aizenman at the University of California-Santa Cruz says the meeting comes at a critical juncture.

"The stakes are too high to ignore the downside risk of a resumption of either more aggressive currency wars or maybe some steps that may lead then to retaliation and the beginning of trade wars," Aizenman said.

The world's three-largest economies - the United States, China and Japan - are entwined in terms of trade and investment.  But economists say the relationship is out of balance.  In part, the reason is that China's currency is significantly undervalued.  That gives Chinese exporters, their competitors say, an unfair advantage.

To protect their own export industries, Brazil, Japan and Thailand have taken steps to slow the appreciation of their currencies.  A number of other countries, including India and South Korea, are considering similar moves.

Is China to blame?

A U.S. Treasury Department senior official, without naming China, contends a large economy keeping its currency from rising "compels other countries to do the same" sparking what he terms "competitive non-appreciation."

China says America's economic problems are caused by Washington's policies and not the Chinese currency.

Professor Aizenman, the vice president of the Asia-Pacific Economic Association, says that in a globalized economy there is no way each of the G20 participants can push its own agenda without cooperation.

"So the key will be to find the proper compromise of each party without sacrificing the main agenda of each party," he noted, "but recognizing that trying to push a narrow agenda too aggressively will penalize everybody."

Compromise essential

Research fellow Kwak Soojong at the Samsung Economic Research Institute in Seoul says both Washington and Beijing appear ready for compromise.  He notes China's surprise interest rate hike this week as one sign of flexibility.

"Therefore I believe there is no reason that these two big countries do not agree upon the serious matters that the rest of the 18 member countries are looking upon," Kwak said. "I am kind of a positive man and I wish those two big countries will agree upon the currency issues."

The meetings here are a prelude to the G20 leaders' summit in Seoul next month.


Steve Herman

A veteran journalist, Steve Herman is VOA's Southeast Asia Bureau Chief and Correspondent, based in Bangkok.

You May Like

Video One Year After Thai Coup, No End in Sight for Military Rule

Since carrying out the May 22, 2014 coup, the general has retired from the military but is still firmly in charge More

Goodbye, New York

This is what the fastest-growing big cities in America have in common More

Job-Seeking Bangladeshis Risk Lives to Find Work

The number of Bangladeshi migrants on smugglers’ boats bound for Southeast Asian countries has soared in the past two years More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Turkey's Main Opposition Party Hopes for Election Breakthroughi
X
May 22, 2015 10:23 AM
Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Turkey's Main Opposition Party Hopes for Election Breakthrough

Turkey’s main opposition Republican People’s Party has sought an image change ahead of the June 7 general election. The move comes after suffering successive defeats at the hands of the Islamist-rooted AK Party, which has portrayed it as hostile to religion. Dorian Jones reports from the western city of Izmir.
Video

Video Europe Follows US Lead in Tackling ‘Conflict Minerals’

Metals mined from conflict zones in places like the Democratic Republic of Congo are often sold by warlords to buy weapons. This week European lawmakers voted to force manufacturers to prove that their supply chains are not inadvertently fueling conflicts and human rights abuses. Henry Ridgwell reports from London.
Video

Video Class Tackles Questions of Race, Discrimination

Unrest in some U.S. cities is more than just a trending news item at Ladue Middle School in St. Louis, Missouri. As VOA’s Kane Farabaugh reports, it’s a focus of a multicultural studies class engaging students in wide-ranging discussions about racial tensions and police aggression.
Video

Video Mind-Controlled Prosthetics Are Getting Closer

Scientists and engineers are making substantial advances towards the ultimate goal in prosthetics – creation of limbs that can be controlled by the wearer’s mind. Thanks to sophisticated sensors capable of picking up the brain’s signals, an amputee in Iceland is literally bringing us one step closer to that goal. VOA’s George Putic reports.
Video

Video Afghan Economy Sinks As Foreign Troops Depart

As international troops prepare to leave Afghanistan, and many foreign aid groups follow, Afghans are grappling with how the exodus will affect the country's fragile economy. Ayesha Tanzeem reports from the Afghan capital, Kabul.
Video

Video Poverty, Ignorance Force Underage Girls Into Marriage

The recent marriage of a 17-year old Chechen girl to a local police chief who was 30 years older and already had a wife caused an outcry in Russia and beyond. The bride was reportedly forced to marry and her parents were intimidated into giving their consent. The union spotlighted yet again the plight of many underage girls in developing countries. Zlatica Hoke reports poverty, ignorance and fear are behind the practice, especially in Asia and Africa.
Video

Video South Korea Marks Gwangju Uprising Anniversary

South Korea this week marked the 35th anniversary of a protest that turned deadly. The Gwangju Uprising is credited with starting the country’s democratic revolution after it was violently quelled by South Korea’s former military rulers. But as Jason Strother reports, some observers worry that democracy has recently been eroded.
Video

Video California’s Water System Not Created To Handle Current Drought

The drought in California is moving into its fourth year. While the state's governor is mandating a reduction in urban water use, most of the water used in California is for agriculture. But both city dwellers and farmers are feeling the impact of the drought. Some experts say the state’s water system was not created to handle long periods of drought. Elizabeth Lee reports from Ventura County, an agricultural region just northwest of Los Angeles.
Video

Video How to Clone a Mammoth: The Science of De-Extinction

An international team of scientists has sequenced the complete genome of the woolly mammoth. Led by the Swedish Museum of Natural History in Stockholm, the work opens the door to recreate the huge herbivore, which last roamed the Earth 4,000 years ago. VOA’s Rosanne Skirble considers the science of de-extinction and its place on the planet
Video

Video Blind Boy Defines His Life with Music

Cole Moran was born blind. He also has cognitive delays and other birth defects. He has to learn everything by ear. Nevertheless, the 12-year-old has had an insatiable love for music since he was born. VOA’s June Soh introduces us to the young phenomenal harmonica player.

VOA Blogs