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UPDATE 1-China trying to avoid currency war - G20 negotiator

Published 10/12/2010, 11:55 PM
Updated 10/13/2010, 12:00 AM

* Says G20 should not focus on specific currency

* Says yuan rose not because of political pressure (Updates with quotes)

SEOUL, Oct 13 (Reuters) - China is trying to avoid a currency war, but issues concerning any specific currency should not be treated as part of an agenda at G20 meetings, a Chinese G20 negotiator said on Wednesday.

Cui Tiankai, a deputy foreign minister who is China's key G20 negotiator, asked whether he was worried about a spectre of a global currency war, said:

"We are doing our best to avoid that. But it requires efforts of all the G20 members, not China alone."

Cui, who was speaking to reporters on the sidelines of a conference in Seoul, did not elaborate.

Record low interest rates and anaemic growth in the developed world made global investors pour money into higher-yielding emerging markets, driving up local currencies and asset markets.

Fearing a loss of competitiveness and speculative bubbles, several nations have been intervening in markets or trying to contain capital flows, giving rise to concerns that uncoordinated action could escalate into a "currency war."

Cui also said China had no specific target level for the yuan and that the yuan's recent appreciation had nothing to do with pressure from the United States or any other country.

"It was not due to U.S. pressure or anybody else's pressure. It was due to China's economic growth," he added, referring to the yuan's recent sharp rise against the U.S. dollar which coincided with pressure from U.S. officials.

The foreign exchange policy has emerged as the thorniest issue as leaders from the Group of 20 leading economies are due to meet in Seoul next month to put the world economy on a more balanced and sustainable growth footing.

Finance ministers and central bank governors will meet in South Korea next week to prepare for the summit. (Reporting by Cheon Jong-woo; Writing by Yoo Choonsik; Editing by Tomasz Janowski)

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