Facing the risk of a dangerous trade war, top finance officials from the world's leading rich and developing nations looked each other in the eye and vowed they wouldn't use their currencies as economic weapons to boost exports.
The agreement that the members of the Group of 20 reached the past weekend in South Korea, though vague on enforcement and long on promises, was hailed Monday by officials and analysts as a step forward in defusing tensions.
Still, it could turn out to be nothing more than a symbolic handshake unless the disparate forum that has become the board of directors for the global economy after the 2008 financial crisis can act on its words and build a viable enforcement mechanism.
Indeed, some of the pressures that have caused global currency tensions showed no immediate signs of significantly easing. The dollar remained under pressure and was near a record low against the Japanese yen amid expectations the Federal Reserve will loosen its already super-easy monetary policy further next week in a bid to boost the weak U.S. economy.
The United States, Europe and Japan, meanwhile, still want China's currency, the yuan, to strengthen at a much faster pace than Beijing has allowed. A weaker yuan helps make Chinese exports cheaper in world markets.
G-20 finance ministers and central bank governors promised Saturday that they will not artificially devalue their currencies. They also vowed to take steps to correct imbalances in the global economy, such as surpluses and deficits in the current account _ a broad measure of trade and investment that currently favors the developing world.
The deal was reached after the direct intervention of South Korean President Lee Myung-bak, who traveled to the southern city of Gyeongju to address G-20 officials and urged a compromise for the sake of the global economy. Lee, a staunch free trade advocate, hosts his G-20 counterparts for a summit next month in Seoul.
Prior to the meeting, some countries were seen intervening in markets to sell their own currencies and buy dollars in a bid to stem gains spurred by the inflow of foreign capital in search of better returns. Japan sold its own currency last month for the first time in over six years to give its exporters a break.
Despite the lack of an enforcement mechanism, other than a promise to agree to guidelines and giving a supervisory role to the International Monetary Fund, analysts expressed some optimism that the G-20 agreement at least marked a step back from potentially dangerous territory.
"I felt that the risk of an outright currency war is probably lower now," Yiping Huang, a professor of economics at the Economic Research Center of Peking University and a former chief Asia economist for Citigroup, said Monday about the communique.
Still, the vagueness of the document, which lacks any numerical targets for bringing surpluses and deficits more into line, drew skepticism from some quarters.
"The agreement reached must be described as lacking in transparency in its possible effectiveness," Japan's conservative Sankei newspaper said in an editorial urging the United States and China _ the world's two biggest economies _ to take the initiative in avoiding protectionist moves that could hurt economic growth.
Despite a push by the U.S. for stronger language, the G-20 said that large imbalances _ such as China's vast trade surplus with the rest of the world _ would be "assessed against indicative guidelines to be agreed," vague terminology that highlights the difficulty of forging a measurable enforcement regime.
World Bank President Robert Zoellick, who attended the G-20 meeting, said Monday that while it succeeded in coming closer together, the temptation to engage in selfish policies needs to be monitored.
"Countries are still preserving what they consider to be their own national interests and we have to keep pushing them to cooperate together in avoiding things like protectionism that could undermine the fragile financial markets," he told AP Television News during a visit to Laos.
The G-20, which accounts for about 85 percent of the global economy, is made up of a wide range of countries at various stages of development. Besides the U.S., it includes the other members of the Group of Seven advanced nations, the traditional driver of the global economy. Fast-rising China, India and Brazil, as well as traditional global political heavyweight Russia are also members as are major commodity producers Saudi Arabia and Australia.
South Korean Minister of Strategy and Finance Yoon Jeung-hyun, who helped broker the weekend deal, on Monday called it a "turning point" for advanced and emerging countries to address the currency issue.
Canadian Finance Minister Jim Flaherty, another official who signed off on the statement, also praised it, but acknowledged the challenges faced in giving the agreement teeth.
"At least all of these issues are being discussed now openly and with some recognition that there's a need for movement on the various facets of the issue," he told reporters in Seoul, adding that more "hard work" needs to be done.
"Some of it I'm sure can be done as the leaders prepare for the G-20 summit here in Seoul," he said. "But I do not expect that this is gonna be resolved in the short term with firm targets."
Foreign exchange analysts at Barclays Capital said in a note Monday that they were optimistic of further progress by the Nov. 11-12 leaders' meeting, but said that the G-20 will be closely watched now that the accord has been reached.
"The acid test of cooperation is whether countries adopt policies that they would not adopt on their own," they said.
The prospect of further action by the Fed at its upcoming meeting has led to widespread fears of yet more weakness in the greenback, which continued Monday.
"The dollar has been under selling pressure due to growing speculation that the Fed may take further quantitative easing in early November," said Yu Yokoi, a currency dealer at Mizuho Bank in Tokyo, adding that the trend shows no sign of changing even after the G-20 agreement.
U.S. Treasury Secretary Timothy Geithner said Saturday after the meeting that the agreement was a landmark in that the G-20 had come together and recognized that the question of imbalances must be addressed.
Ultimately, though, even he seemed to acknowledge that, for now at least, the G-20 is operating on trust.
"I think this is very promising," he said. "Of course, as in any international framework like this, the test is in what countries actually do and you have to see how countries behave over time."
Associated Press writers Shino Yuasa and Tomoko A. Hosaka in Tokyo, AP business writers Joe McDonald in Beijing and Yuri Kageyama in Tokyo, and APTN Producer Jerry Harmer in Vientiane, Laos contributed to this report.