A gathering of finance ministers and central bank governors of the Group of Twenty nations in Washington pledged to wipe out exchange rate misalignments, while reiterating that they will avoid competitive devaluation of currencies.
In a joint communique released after a two-day meeting on Friday, the G20 representatives reinforced their commitments to move more rapidly toward more market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals.
"We will refrain from competitive devaluation and will not target our exchange rates for competitive purposes, and we will resist all forms of protectionism and keep our markets open," the statement read.
The finance officials, at the same time, warned that excess volatility of financial flows and disorderly movements in exchange rates have adverse implications for economic and financial stability.
However, they did not criticize Japan for expanding stimulus, that triggered a sharp reduction in yen recently. Instead, the G20 endorsed the Bank of Japan's policy, saying that Japan's recent actions "are intended to stop deflation and support domestic demand."
The group also urged Japan to define a credible medium-term fiscal plan. The G20 said it will be mindful of unintended negative side effects stemming from extended periods of monetary easing.
Smitten by stringent austerity measures being implemented by many major European economies and ongoing fiscal consolidation in the US, the G20 urged nations to enact measures to increase growth potential and create jobs.
The G20 maintained that global recovery remained uneven and is progressing at different speeds with emerging markets experiencing relatively strong growth, the United States demonstrating a gradual strengthening of private demand, and the recovery in the euro area as a whole yet to materialize.
"Policy uncertainty, private deleveraging, fiscal drag, impaired credit intermediation, and a still incomplete rebalancing of global demand continue to weigh on global growth prospects," it noted.
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