* ECB's Constancio: major economies must respect floating FX
* Any potential FX intervention would have to be coordinated
* FX should not be target of policies, but determined at
By Ritsuko Ando and Sakari Suoninen
HELSINKI, Feb 12 The Group of 20 industrialised
nations should reaffirm their commitment to floating exchange
rates at their upcoming Moscow meeting, European Central Bank
Vice President Vitor Constancio said on Tuesday.
The G20 accounts for 90 percent of the world's economy and
two-thirds of its population. Russia currently heads the group,
which has been split between borrowers seeking to grow out of a
debt trap and surplus countries keener on austerity.
More recently, attention has focused on foreign exchange
rates, with talk of currency wars restarting as the euro gains
ground and some accuse Japan of unfairly weakening its currency.
Constancio said the G20 was likely to state that agreed
rules of market-determined exchange rates would be abided by.
Sources told Reuters on Tuesday that the Group of Seven big
industrialised nations will make a statement on exchange rates
at 1000 GMT, reacting to weeks of flaring rhetoric about a
"We of course want that everyone else respects those
principles," Constancio told reporters on the sidelines of a
bank regulation conference in Helsinki.
"I expect that these principles will be reaffirmed, pure and
simple," he said when asked what he saw coming out of the G20
meeting this weekend in Russia.
Turning specifically to foreign exchange interventions, he
said no country should use such a weapon unilaterally but -
speaking hypothetically - could do so when agreed upon by the
"Those interventions would have to be coordinated with the
other major floating currencies. This is just to underline what
are the principles that have been agreed upon internationally,"
G20 sources and economists say officials are likely to tone
down their rhetoric over competitive currency devaluations, as
also suggested by Constancio. Russia's central bank has accused
Japan's new government of protectionist monetary policy.
Competitive devaluations could become another pothole on the
road to economic recovery, as growth-hungry countries seek to
give their exporters an edge by talking down their currencies or
actively pushing them lower via bold monetary easing.
After fierce criticism of Japan in some quarters, Finance
Minister Taro Aso sought to restore calm on Friday by saying the
recent slide in the yen had gone too far.
Constancio also said there was no currency war going on
currently and that any notion of one had to be avoided. Floating
exchange rates, set by markets rather than by governments,
should be respected, he said.
"Whatever are the policies pursued by countries that have
major currencies with the intention of attaining domestic
targets and exchange rates are not the targets," he said.
Constancio also said he expected ECB March staff growth and
inflation forecasts to be close to the December ones.