G20 pledges to refrain from currency warfare

The jitters -- similar to previous disputes with China -- have been set off by Japan's plan of monetary easing to boost inflation and activity by reducing the value of the yen under new Prime Minister Shinzo Abe.

"We will refrain from competitive devaluation. We will not target our exchange rates for competitive purposes," said the communique after the G20 finance meeting meeting in Moscow under Russia's presidency.

It echoed a similar recent statement by the G7 richest nations which like the G20 statement was also approved by Japan, whose monetary policy has been vehemently criticised by the West in recent weeks.

The statement made clear that forex rates should be set by markets, and not intervening governments.

It affirmed the G20's commitment to move "more rapidly toward more market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals."

Striving to give the impression of a united front among the world's top 20 economies, the G20 ministers vowed to "work more closely with one another so we can grow together.

British Finance Minister George Osborne had earlier warned of the dangers of slugging out "economic warfare" as countries tried to outdo eachother with successive devaluations.

"Currencies should not be used as a tool of competitive devaluation. The world should not make the mistake that it has made in the past of using currencies as the tools of economic warfare," the British chancellor of the exchequer said.

European capitals fear that devaluations of currencies like the yen would make their own exports less competitive and harm extremely fragile economic recoveries at home.

For the first time in several international meetings, the concerns over currencies have overshadowed the economic troubles of the debt-ridden euro zone which leaders hope is heading to a gentle recovery.

All the G20 states are to a greater or lesser extent faced with the same dilemma -- how to boost fragile growth rates without overextending budget deficits or alienating international partners.

The final communique -- as expected -- stopped short of giving precise budget deficit targets which many governments would have found too tough to stomach.

But it said that "credible medium-term fiscal consolidation plans will be put in place" and implemented taking into account the economic conditions and fiscal possibilities.

Earlier, Britain, France and Germany also launched a new drive to help national budgets by making big business pay full taxes and not minimise payments through schemes such as offshore companies.

The G20 ministers agreed to take measures to combat corporate tax avoidance in coordination with the Organisation for Cooperation and Economic Development (OECD) which is preparing an action plan on measures to be taken in a coordinated move by national governments.

"We are determined to develop measures to address base erosion and profit shifting, take the necessary collective action and look forward to the comprehensive action plan the OECD will present to us in July," the final statement said.