G20 vows transparency on rate moves as global growth disappoints

ANKARA, Sept 4 (Reuters) - World financial leaders will agree to calibrate and communicate monetary policy carefully to avoid triggering capital flight, but will not call an expected Federal Reserve rate rise a risk to growth, a draft communique showed on Friday.

Many emerging market economies are concerned that when the U.S (Other OTC: UBGXF - news) . Federal Reserve raises borrowing costs, investors will withdraw from other markets and buy dollar assets, leading to the depreciation of emerging market currencies.

Officials from emerging markets wanted the communique from finance ministers and central bank governors of the Group of 20 biggest economies to say that such a rate rise in the U.S. now would be a risk to growth.

But the draft avoids such wording.

"We note that in line with the improving economic outlook monetary policy tightening is more likely in some advanced economies," the draft communique, seen by Reuters, said.

"We will carefully calibrate and clearly communicate our actions to minimize negative spillovers, mitigate uncertainty and promote transparency," said the draft, which may yet change before it is finally agreed on Saturday.

The text welcomed strengthening activity in some economies but said that global growth fell short of expectations.

The draft indirectly also addressed the devaluation by China of its renminbi currency in August, in a sign the move was not seen as a competitive devaluation to prop up Chinese exports.

"We reiterate our commitment to move toward more market determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals, and avoid persistent exchange rate misalignments. We will refrain from competitive devaluations and resist all forms of protectionism," it said. (Reporting By Jan Strupczewski; Editing by Nick Tattersall)