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					Leaders of the western industrial nations and emerging economies are gathering
together to participate in G20 summits for the first time in Asia to negotiate an agreeable
global economic solution to prevent economic protectionism that satisfies both the
developed western nations and the emerging economies.

Developed western economies with very low growth rate are facing the challenges of
high unemployment and massive deficits. Emerging economies with high growth rate
presently need western markets for their exports.

G20 Ministerial meeting couple of weeks ago has put trade imbalances and forex
exchange rates on top of the agenda of the two days G20 head of states summit
beginning tomorrow.

United States has been pushing China to quickly increase the value of yuan by 20-40%
and to decrease the trade imbalance by 4%. China has refused US demand to
drastically appreciate yuan by 20-40% calling it a “shock therapy” that will lead to social
and economic unrest in the country.

Higher yuan and lower dollar can bridge the gap in trade imbalance between United
States and China as it will enhance Chinese buyers’ purchasing power and make
American products competitive.

The second round of United States policy of “quantitative easing” has intensified the
currency row and it is criticized by Germany and China for weakening the value of

A weaker dollar to enhance U.S. exports will result in depreciation of forex reserves
traditionally kept in dollars in all the countries, and it will also lower U.S. national debt.

Drop in the value of U.S. dollar will adversely affect China the most being the leading
lender to United States and having US $2.65 trillion in forex reserve.

Japan and Brazil had intervened in forex markets earlier to limit the appreciation of their

China has refused to accede to pressures from western developed countries with
dwindling economies especially from USA.

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