US to press G20 to avoid 'beggar thy neighbor' moves

The United States will press other members of the Group of 20 economic powers to avoid competing currency policies during G20 meetings this week, US Treasury Secretary Jacob Lew said Wednesday.

“We will continue to press G20 countries to avoid a downward spiral of ‘beggar thy neighbor’ policies,” Lew said in a speech at a Washington university, according to the prepared text.

“It is imperative that all G20 countries follow through on their recent commitment not to target exchange rates for competitive purposes,” Lew added.

Last Friday the Treasury, in a twice-yearly report on foreign-exchange policies to Congress, said that China’s yuan currency remained “significantly undervalued” and warned Japan and South Korea against using exchange rates to gain a competitive advantage.

“As we noted last week,” Lew said of Chinese forex policy, “we are concerned that in recent months, movement towards more currency flexibility appears to have slowed and the pace of China’s intervention in the market has picked up.”

The new US Treasury chief, who replaced Timothy Geithner in late February, indicated the Obama administration was monitoring closely the actions of its partners in the Group of Seven richest nations.

The G7 includes Britain, Canada, France, Germany, Italy and Japan.

The United States will remain “vigilant” that all G7 members “adhere to their commitment in word as well as action to avoid targeting exchange rates, to orient monetary and fiscal policy toward meeting domestic objectives, using only domestic instruments,” Lew said.

In his speech at Johns Hopkins University School Of Advanced International Studies, Lew highlighted the world’s largest economy’s progress in recovering from the Great Recession.

Growth has continued for 14 consecutive quarters and the private sector has added nearly 6.5 million jobs over the past 37 months, he noted.

“While we can and must do more at home to create jobs, our recovery remains inextricably tied to economic conditions in other parts of the world.”