Canada sides with U.S. in G20 summit currency spat

SEOUL, South Korea — Prime Minister Stephen Harper says the reason the world’s currencies are out of whack has nothing to do with the United States, and everything to do with pegged exchange rates in China.

SEOUL, South Korea — Prime Minister Stephen Harper says the reason the world’s currencies are out of whack has nothing to do with the United States, and everything to do with pegged exchange rates in China.

Speaking to reporters before heading into his first major G20 negotiating session with other leaders, Harper said that if the world is serious about fixing the global economy, countries with pegged exchange rates need to allow far more flexibility.

But he says he is not confident that the summit will lead to a firm resolution on currencies and global imbalances as he had hoped.

“They do have to be addressed. Will they be addressed at this conference? I’m not so sure,” Harper said. “But I think we’re getting a more frank discussion on these matters, that they do have to be resolved.”

Even a week ago, Canadian officials and analysts alike were optimistic that the Seoul summit would bring a meeting of the minds on how to gradually rebalance global trade and investment flows so that the international economy would not be so precarious.

Now, negotiators are barely clinging to the skeleton of an agreement reached two weeks ago by G20 finance ministers.

That deal saw countries vow to allow markets to decide their exchange rates and make sure their trade and investment balances did not bulge to extremes.

Harper had urged other G20 leaders to put some meat on those bones, by signing on to concrete measures that would fulfil the promises.

But while the ideas behind the finance ministers’ agreement are still in play, there is no consensus, and much acrimony, about how to even talk about next steps.

Instead of forging agreements in the lead-up to the summit, negotiators have added more brackets to their draft communique — indicating they have not yet agreed on key elements.

Instead of talking about how to rein in large trade and investment surpluses or deficits, they’re talking about far less potent “structural” changes that G20 members are making — moves to free up the movement of labour and investment within a country’s borders.

Officials are openly criticizing each other’s policies.

Many leaders are heaping scorn on the United States for its recent move to inject US$600 billion into the monetary system in order to stimulate its economy, complaining that the “hot” money is sending exchange rates around the world reeling, and that the stimulus is a way of devaluing the U.S. dollar.

But Harper says the United States didn’t have much of a choice, since interest rates can’t go any lower, and more fiscal stimulus would make the American deficit even more bloated.

“Under the circumstances, the quantitative easing policy is, in the short term, the only option available to the Federal Reserve,” Harper said. “And I’m not sure anyone else has provided any compelling argument as to what alternative policy they would pursue in the short term.”

Plus, Harper says the real reason currencies are reeling is because countries with pegged exchange rates aren’t allowing proper adjustments to be made to the direction of the global economy.

“The problem, in my judgment for Canada, is not the depreciation of the American dollar. It’s the fact the Canadian currency is accepting a disproportionate burden because other currencies are not appreciating the way they should.”

Harper’s support of U.S. actions put him in a small club at the G20. The United Kingdom has also spoken out about the need to let the United States do what needs to be done to assure growth in the American economy.

But Canada is in good company in its concern about China’s currency regime. China has allowed the yuan to appreciate by about three per cent since the Toronto G20 summit in June, but most G20 countries believe the appreciation is far too slow, exacerbating global instability.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Red Deer Rebels forward Ethan Rowland battles with Medicine Hat Tigers forward Brett Kemp during WHL action at the Centrium Saturday night. (Photo by ROB WALLATOR/Red Deer Rebels)
Tigers claw back, hand Rebels 11th straight loss

Tigers 5 Rebels 2 The same old issues continue to plague the… Continue reading

There were six additional deaths across Alberta reported over the past 24 hours, bringing the death toll to 1,926 since the beginning of the pandemic. (File photo)
AstraZeneca vaccine is ready to be used at a homeless shelter in Romford, east London, Wednesday, Feb. 3, 2021. THE CANADIAN PRESS/AP-Frank Augstein
AstraZeneca-linked blood clot confirmed in Alberta

A case of an AstraZeneca-linked blood clot has been confirmed in Alberta,… Continue reading

The Red Deer Catholic Regional Schools Board of Trustees selected the name St. Lorenzo Ruiz Middle School to be built in the north end of Red Deer. (Photo Courtesy of  Red Deer Catholic Regional Schools)
Red Deer Catholic Regional Schools raises about $8,720 for Terry Fox Foundation

Red Deer Catholic Regional Schools raised about $8,720 for the Terry Fox… Continue reading

A nurse gets a swab ready at a temporary COVID-19 test clinic in Montreal, on Friday, May 15, 2020. Health Canada has reversed course on home test kits for COVID-19, saying it will now review applications for such devices. THE CANADIAN PRESS/Paul Chiasson
Alberta declines Ontario’s request to send health-care workers

Alberta is “not in a position” to send health-care workers out of… Continue reading

Red Deer Public Schools will not pilot the new draft curriculum at its elementary schools. (File photo contributed by Red Deer Public Schools)
UPDATED: Red Deer Public Schools says no to piloting new curriculum

Alberta Teachers’ Association support school boards

Each spring, the Okanagan Fest-of-Ale is held in Penticton. This year, as a result of the COVID-19 pandemic, the festival will not be held. However, beer is still available. How much do you know about this beverage? (pxfuel.com)
QUIZ: How much do you really know about beer?

Put your knowledge to the test with this short quiz

Ontario Premier Doug Ford points on a COVID-19 caseload projection model graph during a press conference at Queen's Park, in Toronto, Friday, April 16, 2021. Ontario was set to backtrack on controversial new police powers to enforce stay-at-home orders implemented in the battle against COVID-19.THE CANADIAN PRESS/Frank Gunn
Ford backtracks on new police COVID-19 powers amid intense backlash

TORONTO — Furious criticism of new anti-pandemic powers that allow police in… Continue reading

The official program for the National Commemorative Ceremony in honour of Prince Philip, The Duke of Edinburgh, sits on an empty pew prior to the ceremony at Christ Church Cathedral in Ottawa on Saturday, April 17, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Prince Philip remembered as ‘a man of great service’ during Canada’s memorial service

Canada’s commemorative ceremony in honour of the late Prince Philip offered a… Continue reading

CF Montreal head coach Wilfried Nancy speaks to his players during the team's practice Tuesday, March 16, 2021 in Montreal. THE CANADIAN PRESS/Ryan Remiorz
CF Montreal puts on a show, defeating Toronto FC 4-2 in MLS season opener

FORT LAUDERDALE, Fla. — CF Montreal, carving open Toronto FC’s defence, cruised… Continue reading

Demonstrators using umbrellas as shields approach a point in a perimeter security fence during a protest over the fatal shooting of Daunte Wright during traffic stop, outside the Brooklyn Center Police Department, Friday, April 16, 2021, in Brooklyn Center, Minn. (AP Photo/John Minchillo)
Journalists allege police harassment at Minnesota protests

Some journalists covering protests over the police fatal shooting of Daunte Wright,… Continue reading

A container ship is docked in the Port of Montreal, Wednesday, February 17, 2021 in Montreal.THE CANADIAN PRESS/Ryan Remiorz
Montreal dockworkers begin weekend strikes as talks drag on

MONTREAL — Dockworkers at the Port of Montreal kicked off a series… Continue reading

Brad Dahr, 53, is facing numerous charges. (Photo contributed by Alberta RCMP)
Alberta man charged for alleged sexual offences against children

An Edmonton man has been charged for alleged sexual offences against children… Continue reading

A person walks past a COVID-19 mural designed by artist Emily May Rose on a rainy day during the COVID-19 pandemic in Toronto on Monday, April 12, 2021. Employment lawyers say flouting COVID-19 public health orders when off the job or coming into work while knowingly sick could warrant discipline in the workplace. THE CANADIAN PRESS/Nathan Denette
Risky pandemic behaviour off the clock could mean workplace discipline: lawyers

CALGARY — Employment lawyers say flouting COVID-19 public health orders when off… Continue reading

Most Read