Financial Post | Business

Finance Minister Jim Flaherty says the threat of a “currency war” among Group of 20 members has been quelled, with finance ministers and central bankers saying markets should set currencies levels, not governments.

“We all agreed to strengthen our commitments around market-determined exchange rates and not to target our exchange rates for competitive purposes,” Mr. Flaherty said in a conference call from Moscow, where he attended the G20 summit.

The issue of currency manipulation came to a head just prior to the two-day G20 meeting, when Japan was questioned whether recent changes to its monetary and fiscal policies were also aimed at lowering the value of the yen to gain an advantage for the country’s exports.

The G7 — grouping Canada, the United States, Japan, Germany, Britain, France and Italy — released a surprise statement last Tuesday, saying “will remain oriented towards meeting our respective domestic objectives using domestic instruments…

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