As worries over a potential global currency war grow, G20 finance ministers have responded with a pledge.
The ministers are hoping to settle down speculation that a global currency war could be sparked as some central banks attempt to devalue their currencies to make their companies’ exports more affordable.
The G20 members joined together and have pledged not to manipulate exchange rates to gain an economic edge
This after a two-day G20 meeting in Russia, with the member states saying this will refrain from competitive devaluation.
Canadian Finance Minister Jim Flaherty, in Moscow, gave his opinion on the topic.
“We all agreed to strengthen our commitments around market-determined exchange rates, and not to target our exchange rates for competitive purposes,” Flaherty said.
The members acknowledged that forceful movements of exchange rates could have adverse implications for economic stability.
With Japan’s yen now trading near three-year lows, some investors and politicians have raised concerns about the effects of the country trying to manipulate their currency in order to give it an economic edge.
In response, the G20 ministers all re-committed to following market-determined exchange rates.