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Britain warns against 'economic warfare' on forex at G20

British Finance Minister George Osborne on Saturday warned against "economic warfare" as the G20 states of top world economies met hoping to allay fears they could devalue national currencies to boost economic activity.

G20 finance ministers at their meeting in Russia are later expected to adopt a statement in their communique broadly similar to that issued by the G7 leading developed economies emphasising that markets alone should set currency exchange rates.

The worries had been set off by the policy of monetary easing to boost inflation and activity by reducing the value of the yen planned by the Japanese authorities under new Prime Minister Shinzo Abe.

"There was a very clear G7 statement this week," Osborne told reporters in Moscow. "You will see later today that the G20 will echo what the G7 has said."

"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 added.

"A clear statement from the G20 will help and I expect that to come later today," said Osborne.

French Finance Minister Pierre Moscovici echoed his words, saying "we refuse to enter into any kind of currency war" while insisting that global policy makers take a "cooperative position" on the issue.

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

The G7 group of the world's richest nations -- including Japan -- issued a statement Tuesday to calm markets by declaring a commitment to "market-determined exchange rates".

The United States has urged the world to refrain from "competitive devaluation", a message echoed by the EU commission, France and Germany.