Spectre of currency war rears its head at Davos

A fight is looming between rich and poor countries over the value of the dollar and other key currencies, as governments use monetary tricks to boost their national recovery at the expense of other nations, political and business leaders warned today.

Washington has been leaning hard on Beijing to allow the Chinese renminbi to rise, saying it is being kept artificially cheap to maintain China's cheap labor advantage.



At the same time the United States, Britain and others have encouraged their central banks to pump money into the system as a means of stimulating the economy.



"We are going to see the recovery of nationalism and protectionism, I think we're going to face some type of currency war," said Jose Sergio Gabrielli de Azevedo, president and CEO of Brazilian oil giant Petrobras.



"The US is going to try to use weak dollar policy to help recovery in the US, and Brazil, India are not going to accept that and will fight back, and then we're going to see some struggle and conflicts," he said.



His words echoed concerns expressed by many participants of the World Economic Forum in Davos, Switzerland, this week, where ways to maintain the fragile global recovery — and risks to it — are being hotly debated.



Australian Foreign Minister Kevin Rudd, responding to a Chinese participant's defense of China's currency policies, said, "A few of the rest of us would say a better approach is the appreciation of the renminbi."



Beijing has been wary of letting go control of its currency even as food prices rises are driving up inflation — a situation that has been partly blamed for spurring anti-government protests in the Middle East this week.



Rudd said the world has huge concerns about how China will deal with its inflation, and urged Beijing to "get the exchange rate right."



Concerns about where the renminbi, dollar and in particular the euro are heading were aired as more than two dozen senior officials from key economies met in Davos to discuss sending a political signal that a new global trade deal can be completed this year.



Thailand's prime minister said that failure to conclude the so-called Doha round of trade talks, which have been nearly 10 years in the making, indicated a leadership vacuum on the global stage.



"Despite what global leaders say, they are still very much dictated by domestic politics," Abhisit Vejjajiva told a panel.



Renewed talk of a deal — which some say could add billions to the world economy — has won backing from leaders and executives at the World Economic Forum this week.



German Chancellor Angela Merkel and British Prime Minister David Cameron cited it as a key test for the international community's ability to cooperate in reviving the world economy.



"We are literally metres away from the finishing line," Merkel said yesterday.



Experts remain skeptical that a deal can be reached this year, mainly because China and the United States remain at loggerheads on key issues. Pushing the talks into 2012 — a US presidential election year — would make a conclusion even less likely because the sensitive issue of trade would be a hard sell for politicians of any stripe.



China's growth and worries about Europe's debts have been another focus of attention among the 2,500 business and political leaders discussing the state of the world economy this week.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
News
peoplePair enliven the Emirates bore-draw
Arts and Entertainment
tvPoldark episode 8, review
News
Britain's opposition Labour Party leader Ed Miliband (R) and Boris Johnson, mayor of London, talk on the Andrew Marr show in London April 26
General electionAndrew Marr forced to intervene as Boris and Miliband clash on TV
News
United States President Barack Obama, right, uses actor Keegan-Michael Key from Key & Peele to play the part of 'Luther, President Obama's anger translator'
video
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions