Wishful thinking: Rumoured G20 deal to stabilise currency, like the 1985 Plaza Accord, is ‘just fantasy’, says China’s finance minister

It is wishful thinking to expect a deal addressing currency volatility – like the 1985 Plaza Accord – to be struck at next week’s G20 meeting in Shanghai, says China’s finance minister Lou Jiwei.

“That’s just the media’s fantasy,” Lou said on the sidelines of the Chinese 50 Economists Forum in Beijing on Friday. “That proposal doesn’t even exist.”

Lou was responding at the annual forum to questions about whether members of the G20 might reach an inter-government agreement to jointly intervene in the foreign exchange market.

The forum is a top Chinese economics club whose members include Lou, Liu He, President Xi Jinping’s right-hand man in economic policymaking; central bank governor Zhou Xiaochuan, central bank deputy governor Yi Gang, as well as renowned economist Wu Jinglian.

Asked whether a one-off yuan revaluation would be on the agenda at the meeting of finance ministers and central bankers from the Group of Twenty major economies in Shanghai next week, Lou said: “No, no, no.”

Lou’s comments came on the back of analysts’ –including Bank of America Merrill Lynch chief investment strategist Michael Hartnett’s – speculation that the world’s top economic decision-makers would seize the chance to strike a deal similar to the Plaza Accord.