US proposals to head off a global "currency war" were met with early resistance today as the G20 meeting of finance ministers got under way.
The world's leading economies gathered in South Korea for the start of the two-day G20 talks.
US Treasury Secretary Timothy Geithner wrote a letter to the G20 members pressing them to set targets to address trade imbalances, seen as the root issue behind exchange rate tensions.
America wants emerging nations to set targets to reduce their vast trade surpluses with the West, a plan that could see currencies rise in countries such as China, which has been accused of currency manipulation.
But the plans met with immediate resistance by large exporters such as Japan and Germany. Japan's Finance Minister Yoshihiko Noda called the idea of targets "unrealistic".
The gathering of G20 finance ministers and central bank governors in the South Korean city of Gyeongju comes just two weeks after their meeting in Washington failed to iron out currency differences, which have led to fears of a trade war that could trigger another economic downturn.
In such a scenario, countries devalue their currencies to gain a competitive advantage in a world economy that has yet to fully recover from the global financial meltdown two years ago.
Trade barriers are put up in response, hitting international commerce and reversing the economic recovery.
Bank of England Governor Mervyn King raised this as a major concern in a speech earlier this week.
He said trade protectionism could "lead to a disastrous collapse in activity around the world", as it did in the 1930s, unless countries forge an agreement.
Nations in Asia and other regions have been trying to cool their currencies down amid sustained weakness in the US dollar for fear their exports will become less competitive in world markets.
At the same time, China's currency has been effectively pegged to the dollar, sparking outrage that it is being kept artificially low and giving China's exporters an unfair advantage.
However, recent weakening of the dollar due to expectations of further monetary easing by the Federal Reserve is another factor adding to the strain over currencies.
Some governments have tried to stem currency appreciation through measures including direct intervention in markets or by imposing controls on capital or taxes on foreign investment.
This weekend's talks will help set the agenda for a summit of G20 leaders in mid November, which will be attended by US President Barack Obama and the other heads of state.