Markets in limbo as G20 tries to get a grip on currencies

The Group of 20 leading economies was struggling today to reach any kind of agreement on currencies and trade imbalances as its leaders met in Seoul.

Canadian Prime Minister Stephen Harper said he was "not so sure" the summit could successfully address the question of global imbalances.

Financial markets were in limbo as traders fretted over whether any deal will be achieved by the time the meeting closes tomorrow.

"There is a temptation among traders to sit on hands as they await some meaningful conclusions as to exactly how the largest economies can navigate themselves away from an impending global currency crisis," said Chris Weston, research analyst at IG Markets.

Traders most fear the summit collapsing into a shouting match between the US and China over currency. US Treasury Secretary Timothy Geithner said he did not believe China could continue to resist pressure for an upward revaluation of the yuan.

He added: "That pressure is not going to go away. If you resist those market forces, it's just going to end up in higher inflation or higher asset prices, and that'll be bad for China."

A draft copy of a final statement calls for the G20 to move "toward more market-determined exchange rates".