Sunday, April 21, 2013

Targeting exchange rates for competitive purposes

While currency undervaluation has not yet caught the imagination of WTO members grappling with multilateral negotiations and it's next chief's selection, the issue continues to simmer in the background. Reports from China and Japan continue to trickle in of concerns and relevance of the debate.

The recent G 20 communique  of April 2013 reaffirms the concern with this statement:
" We reiterate our commitments to move more rapidly toward more market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals, and avoid persistent exchange rate misalignments. We will refrain from competitive devaluation and will not target our exchange rates for competitive purposes, and we will resist all forms of protectionism and keep our markets open. We reiterate that excess volatility of financial flows and disorderly movements in exchange rates have adverse implications for economic and financial stability. Monetary policy should be directed toward domestic price stability and continuing to support economic recovery according to the respective mandates of central banks. We will be mindful of unintended negative side effects stemming from extended periods of monetary easing."
Targeting exchange rates for competitive purposes - that is what is the issue here. Does it promote exports unfairly? No WTO dispute in sight yet but the kernel is still boiling.


1 comment:

Anonymous said...

I rarely drop responses, but after reading through a few of the remarks here "Targeting exchange rates for competitive purposes".

I do have 2 questions for you if you do not mind. Is it only me
or do some of these responses look like they are coming from brain dead individuals?
:-P And, if you are writing at other online
social sites, I'd like to follow you. Would you post a list of every one of your social community pages like your linkedin profile, Facebook page or twitter feed?

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