Finance chiefs to call for stable dollar

World finance chiefs will call for the stabilisation of the dollar whose slump some view as a threat to global recovery, sources have said.

    US Treasury Secretary John Snow and Japan's Sadakazu Tanigaki

    British Chancellor of the Exchequer Gordon Brown said on Saturday that

    the Group

    of Seven Finance ministers have reached

     an accord on the thorny issue of a statement

     about the dollar

    from the leading industrialised economies.

    "There has been a positive and constructive discussion which led

    to an agreement among all the members present," Brown said, without

    elaborating.

    But European sources close the talks said the finance ministers have agreed to call for

     a halt to the dollar's

    precipitous slump, especially against

    the euro.

    One source said a final statement issued at the

    Florida meeting would make explicit mention of a G7 appeal

    for "the avoidance of excessive volatility" on foreign exchange

    markets.

    'Flexibility'

    However, the statement was also expected to keep the mention of

    "flexibility", seen as a message to Asian nations to avoid massive

    intervention to keep their currencies artifically low.

    "I insisted (that) if we see speculative moves, each country

    should be determined to do what is necessary to regain stability."

    Japanese Finance Minister Sadakazu Tanigaki referring to a meeting with US Treasury Secretary John Snow

    Finance ministers and central bank heads from Britain, Canada,

    France, Germany, Italy, Japan and the United States had been in a

    contentious debate over the language of the final statement.

    While eurozone authorities had been seeking language

    aimed at restoring the dollar's lustre, they

    had encountered resistance from the United States, for which a

    weaker dollar spurs exports and economic growth.

    European and Japanese authorities maintain that a recent pickup

    in global momentum could be jeopardized by imbalances in the world

    economy.

    They point in particular to huge budget and current account

    deficits in the United States that weaken the dollar, as investors

    shun the greenback, and hamper growth efforts elsewhere.

    Japanese intervention

    Japanese Finance Minister Sadakazu Tanigaki said he told US

    Treasury Secretary John Snow that

    Tokyo remains prepared to intervene in currency markets to support

    Japan's export-led recovery.

    "I insisted (that) if we see speculative moves, each country

    should be determined to do what is necessary to regain stability,"

    the Japanese official said.

    Eurozone officials had suggested that the Bush administration,

    by steadfastly refusing to stem the dollar's slide, is in effect

    trying to export its way back to economic health.

    Snow said earlier he saw the issue as one of growth rather than

    market intervention.

    "The focus of the conference, from my point of view, will

    continue to be growth and what we as ministers can do to build

    support for a higher growth in our domestic economy of our country

    and the economies of the world," he said.

    "The focus of the conference, from my point of view, will

    continue to be growth and what we as ministers can do to build

    support for a higher growth in our domestic economy of our country

    and the economies of the world"

    US Treasury Secretary John Snow

    The Euro

    "We have had a growth gap, a growth deficit, for some time," he

    added.

    European authorities have recently managed to "talk down" the

    euro a bit. The single European currency has been hovering around $

    1.25 after hitting a high of $1.2898 in early January.

    As the

    talks got underway on Friday, the euro surged past $1.27.

    While they may have been at odds on some key issues, Europe and

    the United States agreed that Asian currencies, notably the yen and

    the yuan, should be allowed to appreciate freely, unfettered by

    central bank intervention.

    China has so far resisted Bush administration pressure to

    abandon its dollar-yuan peg, which Washington says unfairly

    undervalues the Chinese currency.

    SOURCE: Agencies


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