GYEONGJU, South Korea (Reuters) – Treasury Secretary Timothy Geithner on Thursday said major world currencies were “roughly in alignment” and called on Group of 20 finance leaders to agree to “norms” on exchange rate policy.

Laying out his agenda for this weekend’s G20 meetings in South Korea , Geithner said in a Wall Street Journal interview he would seek numerical targets for “sustainable” trade surpluses and deficits as a way to help rebalance the global economy.

He is hoping that by persuading major emerging and advanced economies to cooperate on foreign exchange policies, he can coax China into allowing the value of its yuan to rise further.

“Right now, there is no established sense of what’s fair,” Geithner told the Journal.

“We would like countries to move toward a set of norms on exchange rate policy,” he added.

Geithner also sought to provide some reassurances that the United States is not deliberately trying to devalue its dollar.

The Journal said that in the interview he suggested that he saw little reason for the dollar to sink further against the euro and the yen, saying that these “major currencies” were “roughly in alignment now.”

The comments briefly lifted the dollar in Asian trade, pushing it up to 81.84 yen from about 81 yen. It settled back down to 81.15, near a 15-year low.

Geithner on Monday in California vowed that the United States would not engage in dollar devaluation, saying “No country around the world can devalue its way to prosperity.”

CURRENCY TAKES CENTER STAGE

While past G20 meetings avoided direct confrontation on thorny exchange rate issues, the meetings starting on Friday in Gyeongju are expected to address the problem head-on. The dollar’s protracted slide and China’s tightly controlled trading band for the yuan have put upward pressure on other emerging market currencies that are allowed to move more freely.

While some criticism has been leveled at U.S. Federal Reserve monetary easing for weakening the dollar, U.S. officials point to China’s determination to prevent its yuan from rising as the main source of tensions.Actions by several countries, including Brazil this week, to stem the rise of their currencies and protect their exporters, has fueled talk of a “currency war.”

“When large economies with undervalued exchange rates act to keep their currencies from appreciating, that compels other countries to do the same, setting off a dynamic of competitive nonappreciation,” a senior Treasury official told a news briefing on Wednesday, referring to China.

Geithner repeated his view that China’s yuan is significantly undervalued, but if the pace of appreciation since September were sustained, it would correct the undervaluation over time.

“If China knew that if it moved more rapidly, other emerging markets would move with them, it would be easier for them to move,” Geithner said.

CURRENT ACCOUNT TARGETS

One key form of agreement that the United States is promoting are specific targets on current account balances. This would build on commitments made by the G20 in Pittsburgh, Pennsylvania, last year to help rebalance growth away from exports in fast-growing countries and to boost savings in advanced import-consuming economies.

“We are exploring whether we can agree to commit to keep the external imbalances to levels that are more sustainable, making allowances for different kinds of countries, such as commodity producers,” Geithner told the Journal.

China projects that its current account surplus will fall below 4 percent of gross domestic product in the next three to five years, down from about 9 percent in 2008.

But getting buy-in from the divergent G20 members won’t be easy. India, Asia’s third-largest economy, signaled it would oppose plans to set specific limits on current account balances.

“I do believe that this has to be looked at more fundamentally and by artificially linking current account deficit levels to the GDP you are merely skimming the surface. I am not sure that this will be supported by very many emerging economies,” a finance ministry official told Reuters.

Brazil, one of the countries complaining most loudly about the rise of its currency, is not sending its two top economic officials to the Gyeongju meetings.

Brazilian Finance Minister, Guido Mantega, is staying home to deal with currency issues after announcing a new tax on foreign buyers of government bonds on Monday.

And tensions over the pace of the yuan’s rise appear likely to continue. Since China depegged the yuan’s from the dollar in mid-June, it has risen about 2.6 percent.

However, China has signaled through a state newspaper that the recent faster pace of yuan appreciation may not be sustained. Chinese exporters could withstand a further yuan rise of almost 6 percent before they started to lose money, a Reuters poll showed on Wednesday.

U.S. officials maintain that the yuan is probably undervalued by some 20 percent.

(Editing by Tomasz Janowski)