Asia Pacific finance ministers pledged to work towards reining in large imbalances to safeguard growth at an APEC meeting on Saturday, amid tension over US monetary policy and its economic proposals.
Finance chiefs from the 21-nation Asia Pacific Economic Cooperation group including the United States, China and Japan met in Kyoto and adopted wording from an October G20 meeting to avoid "competitive devaluation of currencies".
But fault lines had emerged during the two-day meeting over a US proposal that countries assign a specific limit for their current account surpluses or deficits, amounting to a percentage of gross domestic product.
Beijing on Friday rejected the plan, setting up a potential showdown at next week's G20 summit in Seoul. Saturday’s Apec statement gave no mention of specific targets. Such limits would force China, among others, to take steps to rein in its massive trade surplus, an issue at the centre of tensions with the US over the strength of the yuan.
Southeast Asian nations also plan to raise their concerns over the proposal to target current account imbalances at next week's G20 summit in South Korea, arguing that it could encourage trade protectionism.
Asian economies cite super-loose US monetary policy as a factor roiling currency markets, hammering the dollar and prompting a wave of speculative money to pour into Asia and drive up regional currencies.
In a statement issued on Saturday, the grouping warned of the risks posed by capital flows returning in "a significant volume" to emerging economies in the region, leading to higher volatility and asset prices.
Thai finance minister Korn Chatikavanij warned on Friday that the latest round of easing measures by the US Federal Reserve will likely lead to increased capital flows into Asia, amid complaints from Southeast Asia over “hot money”.
Pressure on the greenback has increased after the US Federal Reserve this week announced $600 billion in further easing measures to pump money into the US economy, a move rounded on by Asian countries including China.
The Fed's announcement, which follows a similar round of quantitative easing worth about $1.5 trillion during the crisis, has stoked fears of a deluge of speculative cash into emerging markets by players seeking higher non-dollar returns.