Buckle up, forex peeps! It's that time of the year again! This weekend finance ministers and central bank governors from the G20 economies will be holding one of their semi-annual sleepovers in South Korea while they mull over the major concerns in the global markets. You want in on the VIP action?
Check out the list of subjects that you can watch out for in the meeting!
"Currency War" has been a buzzword among the market geeks lately as they watch all the drama in the financial markets. After all, what's more interesting than the Bank of Japan (BOJ) intervening in the currency market for the first time since 2004; the U.S. Fed and the Bank of England (BOE) skirting around the issue of quantitative easing; and major economies hollering for China to revalue the yuan?
Boy, the currency situation sure looks more complicated than any Call of Duty: Black Ops scenario! But while some market fanatics think that the currency war is the talk of the town, others believe that the finance officials are actually dealing with something bigger on their plates.
Another hot topic among the G20 is the growing global trade imbalances. Rumor has it that the U.S., along with other major western economies, will use the upcoming meeting to push for a more coordinated effort to rebalance trade.
Despite the global financial crisis, many economies in the East are still heavily reliant on Western consumer demand to grow. This simply cannot continue as it would threaten the sustainability of recovery and job growth.
While definitely a long shot, a collaborative effort by the G20 could make headways to a more stable global economy. For one, they could start by reinforcing demand in countries with huge trade surpluses while stimulating exports in countries with trade deficits.
Recovery of the global economy
Speaking of the global economy, market participants will also be scrambling to get first dibs on what finance ministers have up their sleeves to help its fragile recovery.
Earlier today, U.S. Treasury Secretary Timothy Geithner said that the dollar doesn't need to weaken further against its counterparts to for the U.S. economy to bring sexy back. If he can provide details on how the government will jumpstart the recovery, then maybe the dollar will be able to pare some of its losses.
Along with finance ministers and central bankers, key officials from international finance and lending organizations will also be there to represent yo! You may want to keep tabs on the IMF's proposal to give it more say in overseeing the decisions of the U.S., the U.K., euro zone, Japan, and China.
Hopefully, the upcoming finance ministers' get-together will be more productive than what they had in Washington. If they are still unable to resolve the issues plaguing the international economic arena, then we might have to wait until the first heads of state G20 meeting in Washington on November to resolve the current "currency situation".
- The G7 Talk Show 06:00 08 February 2010
- What Now, IMF? 06:02 12 October 2010
- G-20: All Bark and No Bite? 05:38 21 February 2011
- Tensions Easing Up Ahead of G20 Meeting? 06:03 08 November 2010
- What a Stronger Yuan Means for the Global Economy 06:16 16 April 2012