No Manipulation of Forex Rates Allowed in TPP

As a sidebar to the largest trade pact in two decades, the U.S. and 11 other Pacific Rim countries agreed not to manipulate foreign-exchange rates and to consult on monetary policies.

Economies like Vietnam and Malaysia, which rely heavily on exports, promised not to devalue their currencies in order to gain a competitive advantage. In exchange, they want to get more insights into U.S. monetary policy.

An interest rate hike on the part of Fed, the first in almost a decade, will probably prompt capital to flee developing nations, causing their currencies to slump.

During the negotiations, some of the smaller economies highlighted the far-reaching impact monetary policies in larger developed countries - read the U.S. - have on them, according to a person familiar with the negotiations, who asked not to be named because the details of the talks aren’t public.

Participants have agreed  that consultations will take place among senior-government officials, although the precise framework has yet to be determined, the person said. And of course, such talks don’t mean the U.S. central bank will need to follow other countries’ wishes. 

The currency pledge carries weight given that it brought together a cross-section of countries producing 40 percent of the world’s global economy output.