G20 seeks to lift market mood

Date

9/5/2015 11:27:58 PM

(MENAFN- The Peninsula)

Ankara: Ministers and central bank chiefs from the world’s top 20 economies sought yesterday to bolster market confidence in the global economy and calm mounting jitters over the fallout from China’s slowdown.

Also preoccupying the economic supremos from the G20 is the monetary policy of the US Federal Reserve with economists warning a rate rise at its next meeting later this month could deal a heavy blow to emerging markets already mired in trouble and in some cases recession.

China rattled markets in mid-August with a sudden devaluation of its currency amplifying concerns about its slowing growth and leading to panic selling on markets.

Sources close to the talks said it is highly improbable that China will be specifically mentioned in the final communique to be published later Saturday after two days of talks in Ankara.

But US Treasury Secretary Jacob Lew pressed his Chinese counterpart on the sidelines of the meeting to improve communication of economic policy and refrain from “competitive devaluation” of its currency to gain advantages for Chinese exporters.

In an unusually strongly-worded statement a US treasury spokesperson said Lew also noted that it was important for China to signal that it will allow market pressures to drive the yuan “up as well as down”.

The Chinese central bank on August 11 devalued the yuan by nearly two percent surprising markets and raising concerns about the effects of China’s economic slowdown and bitter criticism of its opaque communications.

“It would be a very bad thing for the global economy if we get into a pattern of competitive devaluation” a senior US treasury official told reporters adding the issue would be addressed in the final communique.

The official said there had been “detailed discussions” but the group was agreed “competitive devaluation is a threat that has to be guarded against.”

AFP

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