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Int'l tension over currency war rises

10-12-2010 14:31 BJT

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The International Monetary Fund and World Bank annual meetings have concluded, with finance ministers agreeing to raise the IMF's influence on currency rates, but at a standstill on resolving currency disputes.

A global currency war may be a step closer after finance leaders meeting at the International Monetary Fund conference this weekend failed to produce a quick fix for uneven global growth and tensions in currency markets.

International tensions over currency rates have risen sharply, sparking increased talks of intervention.

But the meeting did showcase the growing influence of emerging markets, which are on the verge of winning a greater share of IMF power.

But hopes of any resolution on currency policies faded quickly, pushing the problem onto the agenda of the G20 leaders' summit in Seoul, South Korea next month.

Toby Nandle, an analyst at Barings Asset Management says the IMF is not the forum to sort out global currency issues.

Toby Nandle, Analyst of Barings Asset Management said "The problem is one of a global imbalances and this is not a problem that can be delegated to an international organization such as the IMF. It's a problem that needs to be addressed by heads of state and by finance ministers because the resolution of said problem has profound affects on different economies and no economy will delegate its future to the IMF unless it is under extreme duress. "

The European Central Bank has also entered the debate, saying global cooperation is needed to avoid volatility in foreign exchange markets.

Economists are looking to the G20 meeting on November 12 to move things forward.

Toby Nandle said "If there is no agreement by November 12 - a global disconnect - I think Guido Mantego hit the nail on the head- we have a global currency war on the way. The U.S. Federal Reserve has shown it's got fire power in this global currency war by quantitative easing mark 2 - a policy which I believe to be quite misguided. "

Investors are expected to keep selling the U.S. dollar and chasing higher returns in emerging markets after the weekend's lack of progress.

Editor:Xiong Qu |Source: CNTV.CN

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