The G20 Finance Ministers' Meeting Has Held &Nbsp; &Nbsp; The Exchange Rate Issue Has Become A Hot Topic.

(G20 the meeting of finance ministers and central bank governors will be held in Qingzhou City, Korea today and tomorrow.

The meeting of leaders of the group of twenty (G20) will be held 20 days later. The hottest issue of exchange rate has become a hot topic for participating members.

The "pre coordination meeting", which ended in Qingzhou, South Korea yesterday.

What is optimistic is that all participants yesterday agreed that

Another draft of the initial communiqu issued by the G20 finance minister and central bank officials showed that the G20 economies promised not to devalue the currency, suggesting that the organization could take a clear objection to the so-called global exchange rate war.

Yesterday's meeting will also be held today (22) and 23 in Qingzhou, G20 finance ministers and central bank governors meeting, the meeting will be based on the outcome of the 21 deputy finance ministers meeting, focusing on global economic imbalance, financial integrity, capital inflow into emerging economies, IMF share reform, global financial security network, strong and sustainable balanced growth framework, financial regulation reform and energy and other issues.

The above meeting was held in Seoul, South Korea in from November 11th to 12th.

Yin Zengxuan, chief executive of Korea's Ministry of Finance and planning, said in Qingzhou yesterday that he would hold bilateral talks with officials from China, the United States, Canada and France to discuss exchange rates and other issues during the meeting of the finance ministers.

"I am optimistic about the outcome of the meeting," he said.

Coordinating the exchange rate for the summit

As the South Korean government fears that the conference will become the "exchange rate battleground" among major countries, the participating parties will launch final coordination on the exchange rate issue at the Qingzhou conference, and strive to narrow differences on the main points of exchange rate and so on.

"The Qingzhou conference will discuss in depth the exchange rate conflicts between developed and emerging countries," said Yin Zengxuan, chairman of the G20 conference and chief financial officer of Korea.

At present, the exchange rate dispute between the major countries such as the United States and China is becoming more and more serious. Therefore, whether the Qingzhou conference can reach certain consensus on the issue of exchange rate has attracted much attention.

The focus of yesterday's meeting was on exchange rate issues and IMF share reform.

The us strongly urged emerging economies to raise the value of their currencies and eliminate the gap between the trade surplus countries and the deficit countries.

The US side stresses that China needs to allow the renminbi to appreciate.

For this reason, many emerging economies such as China say that developed countries should not exert their appreciation pressure on emerging economies on the basis of trade deficits.

Geithner, the US Treasury Secretary, left for the G20 meeting on Wednesday. In addition, the chairman of the Federal Reserve Committee, Bernanke, China's finance minister Xie Xuren, governor of the people's Bank of China Zhou Xiaochuan, the president of the European Central Bank Tyse and Japanese finance minister Noda Yan, attended the Qingzhou meeting.

However, according to the Nanyang Business Daily, the Ministry of finance of Brazil, which recently joined the global exchange rate war, recently pointed out that finance minister Mantega may cancel the G20 finance ministers' meeting to be held in Korea on 22 May, and intends to stay in the country and supervise the exchange market in person.

Therefore, some market participants are pessimistic and expect that the G20 conference can solve the currency dispute full of variables.

It is reported that South Korea, as the chairman of the G20 conference, sent relevant officials to China in October 19th to introduce the status quo of the exchange rate dispute to China and pave the way for consensus among the parties at the Qingzhou conference.

If there is no agreement between major countries at this Qingzhou meeting, the issue of exchange rate conflicts is likely to become the main topic of the G20 summit in Seoul.

If this happens, the South Korean government will have to try second arbitration.

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Promise not to let local currency compete for depreciation

In the process of helping the global economy out of the financial crisis and recession, G20 has had a remarkable cooperation experience, but after that, some Member States strongly intervened in the foreign exchange market, leading to the differentiation of G20 policymakers.

During this period, market participants have been deeply concerned about whether G20 can unify its position in this regard.

Speaking at a regular press conference yesterday, Chinese Foreign Ministry spokesman Ma Zhaoxu said that the focus of G20 cooperation is to maintain unity and resolve the underlying causes of the international economic and financial crisis and consolidate the momentum of world economic recovery.

According to the initial communiqu draft issued by G20 finance ministers and central bank officials, G20 economies promise not to compete to devalue their currencies, indicating that the organization may adopt a clear opposition to the so-called global exchange rate war.

The draft communiqu tion shows that G20 will turn to a more market-oriented exchange rate mechanism. G20 adopts this conventional expression of the United States, which does not encourage countries to intervene in the foreign exchange market.

It is worth mentioning that perhaps because of concerns about the excessive appreciation of currencies in Asia and other export dependent economies, the draft also shows that G20 will minimize the adverse effects of excessive exchange rate and disorderly fluctuations.

However, since the debate has just begun, the content of the final communiqu may be substantially changed compared with the draft.

In addition to the exchange rate issue, the G20 communiqu also said it would work more effectively to manage the capital of fast and disorderly inflows into emerging markets, and promised structural reforms to quickly restore financial markets and promote regulatory reform.

G20 members vowed to play a role in promoting sustained economic growth and reducing global imbalances.

US officials do not have much expectation of the possibility of issuing substantive communiques after the 23 G20 finance ministers and central bank governors.

Even if there is any important announcement, the host country of South Korea would prefer to leave it to the G20 summit held in Seoul in November.

Geithner said that everyone is trying to figure out what is in line with their own interests. This problem can not be solved in two weeks, it will take 35 years to solve it.

He said he hoped to promote G20 as a more courageous institution.

Frequent communication between China and America

In the global market, the atmosphere of "currency war" is becoming more intense. The exchange rate issue has once again become the focus of controversy between China and the United States. During this sensitive period, the exchanges between China and the United States tend to be frequent.

Yesterday, Chinese Foreign Ministry spokesman Ma Zhaoxu confirmed that President Hu Jintao will pay a state visit to the United States in January next year.

He pointed out that China and the United States have maintained close communication on matters related to the visit, and the preparatory work has been launched. This will be a very important visit and will have a far-reaching impact on Sino US relations. The two sides hope that the visit will be smooth and successful, with new progress in promoting the comprehensive and positive cooperation between China and the United States.

In January of next year, President Obama invited Hu Jintao to visit the United States early next year in Toronto, Canada.

Before that, the second meeting of the two track and high-level dialogue between China and the United States was held in Washington in from October 18th to 19th.

Former Chinese State Councilor Tang Jiaxuan and former US Secretary of state Kissinger respectively led the Chinese and American delegations.

US Defense Secretary Gates and finance minister Geithner took part in the dialogue. The two sides discussed issues of common concern including the RMB exchange rate and Sino US military exchanges.

Although Geithner said the US would not depreciate the US dollar in order to stimulate exports, he did not forget to exert new pressure on the RMB exchange rate in his interview with the Wall Street journal. He said that if the pace of RMB appreciation continued in September, it would help to correct the underestimation of the currency, and said it would also play a role in other emerging market countries.

Speculators seek exchange rate trading opportunities

While G20 finance ministers and central bank governors are preparing to resolve the escalating exchange rate policy conflict through weekend meetings, investors are also actively looking for every opportunity for exchange rate risk trading.

The Central Bank of China announced on 19 August that it would raise interest rates in an attempt to cool down China's economic growth.

This makes the global market nervous.

China's rate hike prompted global investors to buy dollars in order to avoid risks, leading to a 1.35% rise in the US dollar index for 19 days, the biggest gain since August.

But a day later, they sold out of the US dollar for the US Federal Reserve Committee's injection of US dollar funds into the market, which led to the depreciation of the US dollar, resulting in the US dollar index hitting 1.3% on the 20 day.

It can be seen that investors have already regarded China's interest rate increase as a reason for risk trading rather than a risk aversion.

Investors are speculated about which central bank may take new action against the exchange rate problem in order to find new arbitrage opportunities.

At the same time, the central parity of RMB against the US dollar rose slightly by 59 basis points in the 6.6695 day yesterday, ending the three consecutive trading day's downtrend.