The United States won G20 backing today to tackle groaning trade imbalances as the world's biggest industrial nations vowed to avoid tit-for-tat currency devaluations.
But after all-night talks among senior G20 officials, meeting in South Korea amid warnings of a global "currency war", the Group of 20 shied away from specific targets on trade for China, the United States and others.
In a statement, G20 finance ministers agreed to "refrain from competitive devaluation of currencies" and aim for "more market-determined exchange-rate systems".
The G20 committed to "pursue the full range of policies conducive to reducing excessive imbalances and maintaining current-account imbalances at sustainable levels", the text said.
The International Monetary Fund won greater power to oversee G20 commitments, tasked with compiling periodic reports that investigate how a country's economic policies can damage major trading partners.
IMF chief Dominique Strauss-Kahn said the G20 ministers had, in parallel, struck a "very historic" deal to revamp the Washington-based financial watchdog to give China and other emerging powers a greater say.
Under the deal, which has been years in the making, Europe agreed to cede two seats on the IMF board to accommodate developing nations. Brazil, Russia, India and China will all in future rank among the top 10 IMF shareholders.
The G20 also signed off on a deal for tighter regulation of banks and big finance firms blamed for triggering the global economic crisis, raising the amount of top-quality capital that banks must hold in reserve for a rainy day.
The commitments on current accounts and currencies had won widespread backing from advanced economies, while Chinese officials "left the room comfortable enough" with the language, an official said.
Jittery financial markets were looking for a strong stand from G20 members against beggar-thy-neighbour currency policies, in the leadup to a November 11-12 summit in Seoul.
"I think the agreement will go some way towards calming market fears of currency wars," Marco Annunziata, chief economist with Unicredit Group in London, said.
"Whether the positive impact is durable, however, will depend on whether national policies are in fact changed to be in line with the agreement," he warned.
"Otherwise this will be seen as an empty statement of principle."
The unwieldy G20 faces criticism about its effectiveness as a forum. But a senior US administration official told reporters that the group had forged "a cooperative outcome rather than... more drift and unilateral action".
Two years after the world's worst financial crisis since the 1930s erupted, a super-loose US monetary policy is hammering the dollar, leading to uncomfortably strong currencies for other G20 economies.
Japan, South Korea, Brazil and Indonesia among others have intervened unilaterally in recent weeks to curb the alarming rise in their currencies, which is hurting their exporting companies.
But in a highly integrated world economy, "uncoordinated responses will lead to worse outcomes for everyone", the G20 nations agreed in their statement.
Many emerging markets are suspicious that the United States is deliberately allowing the dollar to flounder so that it can export its way back to prosperity.
But for the United States, which is in the throes of election season, China's firm grip on the yuan's value is the root of the problem. Critics say that policy gives China's export machine an unfair edge.
At the weekend talks, US Treasury Secretary Timothy Geithner urged nations running big current-account surpluses to change their exchange-rate policies.
Targeting China's hefty current account surplus would be an indirect way for Washington to cajole Beijing into letting the yuan appreciate.
Officials said Geithner's desired target would be four per cent of GDP by 2015. China had a current-account surplus of 4.9 per cent of GDP in the first half of this year.
The final text made no mention of numerical targets for the current account, which Japanese finance minister Yoshihiko Noda had said were "not realistic". Exporting giant Germany, among others, was also unhappy at binding targets.