US warns of retaliation against those who devalue to make trade gains

US warns of retaliation against those who devalue to make trade gainsUS Treasury Secretary Jack Lew warned of swift retaliation against countries that use weaker exchange rates to make trade gains, repeating views he expressed at the recent Group of 20 meeting in Istanbul.

Mr Lew said the US economy had turned the corner but the rest of the world needed to do more to revive growth, Reuters reported.

He said Europe should use fiscal policy more to boost stimulus measures, but said it was slow to use fiscal tools because some countries did not have room to do so, as well as face challenges over Ukraine and Greece.

Mr Lew spoke in Mumbai, India's the financial capital, on the first day of a two-day visit where he meets Finance Minister Arun Jaitley.

The euro has weakened against the dollar following the announcement of EUR1 trillion (US$1.13 trillion) in stimulus measures by the European Central Bank, while China and commodity exporters, such as Australia, have also seen currency weakness of late.

But Mr Lew drew a distinction between such "quantitative easing," which aims to stimulate credit and growth, and those targeting the exchange rates to gain an "unfair trade advantage."

Quantitative easing is when the central bank creates money to buy government bonds to increase private sector spending, which is what the ESB is doing.

"We have been clear, that kind of unfair policy is something that we will oppose and we will push back very hard on," said Mr Lew. "It would be a big mistake for the world to get into a race to devalue."

He said the US economy had "turned a corner," and was showing sustained growth.

"What we have now in the US is a recovery that will feed on itself, but we can't look at the US as an island to itself. So we are concerned that there needs to be more growth in other parts of the global economy as well."