Excited talk of currency wars has given way to an uneasy truce, but what has so far been a phoney war could yet break out into outright hostilities.
The statement thrashed out among finance ministers of the Group of 20 leading economies in South Korea this weekend did no more than paper over the radically different views of the two main protaganists — the U.S. and China.
Sometimes international meetings sow the seeds of understandings that, over time, bear policy fruit. But most times what you see is what you get.
And what world markets saw in Gyeongju was two countries poles apart on who is responsible for global imbalances that are generating currency volatility and threaten to spill over into 1930s-style protectionism — at a time when the world economic recovery, in the words of the G-20, is "fragile and uneven".
"On the currencies, I would have liked to have seen more substantive progress there," said Canadian Finance Minister Jim Flaherty.
"We did make directional progress," he said, but added: "There was a lot of push back from China and some of the other countries as well. I think there's nervousness about the fragility of the economic recovery."
Washington pressed its case that countries with big external surpluses, primarily China, need to let their currencies rise.
The result? A call from ministers for more market-determined exchange rate systems, the avoidance of competitive devaluations and the pursuit of a full suite of policies to reduce current account imbalances.
Developing economies countered with criticism of rich countries for cranking up their money-printing presses and, in the process, sending a flood of money into their markets that is inflating asset bubbles and forcing up their exchange rates to the detriment of export industries on which they rely for growth.
The result? A promise in the closing statement that countries that issue reserve currencies — code principally for the U.S. — would be vigilant against excessive volatility and disorderly movements in exchange rates.
"The outcome of the G-20 meeting clearly shows progress in the global rebalancing policy debate," said Thomas Stolper, chief currency strategist at Goldman Sachs in London.
"At the same time, this is not a Plaza-style statement that signals a broad agreement on the role currencies have to play in the global rebalancing," he added, referring to the 1985 Plaza Accord by five leading nations to drive down the dollar.
Representation and responsibility
Chris Turner, head of FX strategy at ING Commercial Banking in London, argued that the G-20 surpassed market expectations by delivering a comprehensive set of reforms: Washington had pledged not to devalue the dollar in return for an agreement by emerging market (EM) economies to let their currencies appreciate.
Seen through this prism, a surprise agreement to transfer six percent of voting power at the International Monetary Fund to developing countries is part of a grand bargain.
"The U.S. now argues that with greater representation comes greater responsibility. Thus EM nations should allow their currencies to trade more freely," Turner said in a note.
Yet it did not feel in Gyeongju that a new era in global cooperation was dawning.
Chinese Finance Minister Xie Xuren demanded that rich countries implement responsible policies; German Economy Minister Rainer Bruederle said quantitative easing by the Federal Reserve was tantamount to manipulating the dollar's exchange rate.
There was also a cool reception to U.S. Treasury Secretary Timothy Geithner's initiative to limit current account imbalances to four percent of gross domestic product.
India, Russia, Japan and Germany, as well as China, the target of Geithner's tactic, all rebuffed the proposal.
U.S. officials proclaimed themselves pleased that floating the idea of target ranges for imbalances had switched the focus of the debate from the narrow issue of the yuan's exchange rate.
But Canada's Flaherty was not alone in saying he was "not overly optimistic" that G-20 leaders would reach agreement on more detailed targets at their Nov. 11-12 summit in Seoul.
"Other countries make the point that there are very particular national circumstances, so a single number applied to all countries may not be appropriate," George Osborne, Britain's finance minister, said.