Reply #3: Currencies center stage as G20 gets underway

[ozymandius]

GYEONGJU, South Korea – The U.S. pressed for emerging nations to set targets to reduce their vast trade surpluses with the West, a plan that could see their currencies rise, as a summit of top finance officials fumbled for ways to reduce tensions over exchange rates that threaten to escalate into a trade war.

The gathering of G-20 finance ministers and central bank govenors in the South Korean city of Gyeongju comes just two weeks after their meeting in Washington failed to iron out currency differences that have led to fears of a trade war that could trigger another economic downturn.

In such a scenario, countries devalue their currencies to gain a competitive advantage in a world economy that has yet to fully recover from the global financial meltdown two years ago. Trade barriers are erected in response, hitting international commerce and sending the economic recovery into reverse.

http://news.yahoo.com/s/ap/20101022/ap_on_bi_ge/as_world_economy_g20

Failed to iron out their differences? The press release volleys from the past two weeks implied no intent toward reconciliation.