Key wades into currency wars

Prime Minister John Key. Photo / Getty Images

Just two days after lecturing the Japanese on New Zealand's bottom-line conditions for free trade talks, the Prime Minister has waded into the currency wars and told fellow Apec leaders they must tackle the emerging crisis.

John Key - who is starting to really assert himself at what is his third meeting of the 21-strong grouping of Asia-Pacific economies - warned the depreciating United States dollar and possible retaliation by other countries would be "negative for growth and negative for this region".

He was speaking as the G20 group of major economies agreed to avoid "competitive devaluation" of their currencies following talks in Seoul, the South Korean capital.

The leaders - some of whom will be arriving in Japan today for the annual Apec summit - agreed to come up with "indicative guidelines" to tackle trade imbalances affecting world growth.

Speaking at an Apec-related business forum, Mr Key said escalating tensions over foreign exchange policies could threaten economic growth.

"If we don't get this right, it's my view that we will see currency wars, we'll see retaliatory action taken that will be bad for economic growth, that would have unintended consequences and would be bad for integration in the region."

* Herald political columnist John Armstrong is reporting from Apec in Yokohama.