Controlled dollar devaluation only hope to avert currency war

CAREFUL calibration of a US dollar devaluation looks to be the only way to avert the sort of currency war flagged by Brazil and others, leaving G20 powers the unenviable task of agreeing some control of the process.

The top world economies, shaken by three years of financial turmoil, are scrambling to cap or weaken their currencies in a fight over fragile global demand for exports – prompting retaliatory capital curbs and damaging trade rows.

As G20 finance chiefs prepare to meet on October 22, they are no closer to resolution of the decade-old bugbear of global imbalances between export-driven economies – mostly developing nations such as China, but also Japan and Germany – and the big global consumers, the United States, Britain and elsewhere.