Timothy Geithner's call for currency appreciation rattles G20 finance officials
Japan called US Treasury Secretary Timothy Geithner 'unrealistic,' while India doubted he would have support among emerging economies at the G20 summit next month.
Gyeongju, South Korea
United States Treasury Secretary Timothy Geithner is running into a storm of criticism here over his demands for some of the world’s other leading economies to raise the value of their currencies in order to increase the sale price of their exports on American markets.Skip to next paragraph
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Mr. Geithner laid down the gauntlet in what’s seen as a highly contentious letter to other financial ministers and central bank governors meeting here Friday and Saturday in hopes of reaching a consensus on critical financial issues before next month’s G20 summit in Seoul.
The letter was viewed as an attack on China, which has resisted intense American pressure to raise the value of the yuan and would prefer to sidestep the issue as much as possible at the G20 summit on Nov. 11-12, when President Obama and China’s President Hu Jintao will have the chance to argue the issue with other heads of state.
Geithner calls for currency adjustment
Geithner, in his letter, not released by United States officials but revealed by aides of some of the recipients, warned bluntly of the dangers of seeking “competitive advantage by either weakening their currency or preventing appreciation of undervalued currency.”
US officials insist the low value of the yuan, and the currencies of other major countries, is partly responsible for a US trade deficit last year of $380 billion, including $227 billion with China alone. The deficit with China this year by the end of August was $173 billion.
Geithner's letter called on all those countries that are running up huge trade surpluses to commit themselves to “structural, fiscal, and exchange rate policies” that would encourage greater import into their markets. He advised they let their “significantly undervalued” currencies adjust fully over time.