主题：【世界经济】G7财长央行行长会议喊话，“汇率波动太大有害” -- 西风陶陶

G7 Says Currency Volatility a Growth Risk

Sat February 7, 2004 09:38 PM ET

(Page 1 of 2)

RELATED ARTICLES

G7 Talks Tough on Forex But Action Doubtful

G7 Sends Powerful Warning to Argentina-Officials

Canada's Goodale Sees Better Growth, No Big Tax Cut

Brown Upbeat on U.K., World Economies

By Glenn Somerville

BOCA RATON, Fla. (Reuters) - Finance chiefs from rich nations agreed on Saturday a global recovery was gaining steam and papered over tensions on currency exchange rates by warning markets "excess volatility" was not to be tolerated.

As finance ministers and central bankers from the Group of Seven wrapped up a two-day meeting at a plush Florida resort, they sought to calm fretful currency markets and to offer a balm to Europeans worried their rising euro could hurt growth.

"Excess volatility and disorderly movements in exchange rates are undesirable for economic growth," the G7 said in a closing communique. "We continue to monitor exchange markets closely and cooperate as appropriate."

The statement by the United States, Britain, Canada, France, Germany, Italy and Japan was a calculated effort to counter the impact of their announcement in Dubai last September urging "more flexibility" in currencies -- which prompted a dollar sell-off that took its value down 10 percent against the euro.

But analysts said while the statement may give pause to markets in the short term, it will not change a longer term downward trend for the dollar stemming in part from record U.S. budget deficits.

"I think we are much closer to intervention," said Marcel Kasumovich, a foreign-exchange strategist with Merrill Lynch in New York, referring to the possibility that a continued appreciation in the euro's value could lead Europe to counter it by selling the currency and buying dollars.

LET MARKETS REIGN

U.S. Treasury Secretary John Snow, at a press conference afterward, made clear that was not something the free market-oriented Bush administration wanted to see and repeated a familiar refrain that competition should reign.

"A strong dollar is in our national interest," Snow said. "But the relative values of currencies are best established in open competitive currency markets. Nobody can devalue their way to prosperity."

The G7 statement went a step further, saying there should be "more flexibility in exchange rates ... for major countries or economic areas that lack such flexibility," in an apparent reference to Asian countries that peg their currencies to others -- as China links its yuan to the dollar -- or intervene regularly to affect values.

Snow turned aside a question on whether China, which the United States wants to loosen its 8.3 yuan peg to the dollar, was the intended target. He said only that the statement was agreed by the full G7 and said "it speaks for itself."

Japan's Finance Minister Sadakazu Tanagaki denied that Japan, which has spent heavily to keep its yen from rising in value and sapping its exports, was one of the countries that lacked flexibility in currency issues.

"That's not the case," he said after the G7 meeting, indicating that Tokyo would keep up its market forays when the yen got out of line with fundamentals, a resolve which could be tested as early as next week.

In fact, the United States felt getting more specific references to the need for flexibility into the communique was worth giving Europe a concession by inveighing against volatility. Nor did the resulting compromise lessen pressure on China -- by some measures now the world's second largest economy -- to speed up currency reform.

MANY MANIPULATORS

China is not the only country that manipulates its currency. South Korea and Taiwan, among others, are regularly criticized for doing so. Some G7 participants made lightly veiled references to the Asian countries.

"The various currencies that are not flexible will recognize themselves," European Central Bank President Jean-Claude Trichet said. "There is not only one, there are quite a few."

European officials arrived at the meeting, held in a luxurious resort on Florida's wealthy "Gold Coast" near Miami, determined to have the Dubai wording altered to clarify that it was not intended to sanction a soaring euro that could imperil their export-led recovery.

The U.S. view after the meeting was that Europe had been wrong in feeling the Dubai statement sanctioned a dollar sell-off but that it was worth accommodating them as long as the importance of flexible currencies was preserved.

The G7 participants, while allowing that a global economic recovery was quickening, warned the pace was uneven and said countries needed to redouble their efforts to boost growth.

The officials also wagged a finger at Argentina, urging it in the statement to "engage constructively" with creditors and live up to its pledges to multilateral lenders.

A number of G7 officials have expressed frustration at Argentina's slow progress in talks with private bondholders aimed at restructuring $88 billion in defaulted debt.

Buenos Aires has held fast to its offer, made in Dubai last year, of 25 cents on every dollar of nominal debt. Previous 1| 2

Dollar Declines Against Euro After G-7; Fed May Keep Rate Low

Feb. 9 (Bloomberg) -- The dollar fell against the euro in London on speculation U.S. interest rates will stay lower than those in Europe, undermining European ministers' efforts at a weekend Group of Seven meeting to curb their currency's rise.

After rallying more than a cent in Asian trading following the G-7's call to avoid ``excess volatility,'' the U.S. currency surrendered gains. A U.S. jobs report Friday lowered expectations the Federal Reserve will raise its target interest rate from 1 percent, half the level of the European Central Bank's benchmark.

``The G-7 statement doesn't change a thing,'' said Jake Moore, a currency strategist in Tokyo at Barclays Capital Inc. ``Rates are not going up quickly. The labor market is soft, and the dollar will once again test its lows.''

The U.S. currency fell to $1.2741 per euro at 7:01 a.m. in London, according to EBS prices from $1.2706 late Friday in New York, having strengthened to as much as $1.2605. The dollar was also at 105.66 yen, from 105.49 yen. The euro has climbed 18 percent against the dollar in the past 12 months. The dollar may fall to $1.3 per euro in the next six weeks, Moore said.

Fifty-seven percent of the 58 strategists, traders and investors surveyed from Tokyo to New York on Friday by Bloomberg News recommended selling the dollar against the euro, a reversal from the 56 percent who said to buy it a week ago. Forty-five percent advised selling the dollar this week against the yen.

Fed Outlook

U.S. employers added 112,000 jobs last month, the Labor Department said Friday. The median forecast of 69 economists surveyed by Bloomberg was for an increase of 175,000. Fed chairman Alan Greenspan will testify in Congress this week on the state of the economy and interest rates.

``The jobs report reinforced the impression rates aren't rising soon,'' said Allison Montgomery, currency strategist in Sydney at Westpac Banking Corp. ``The dollar is going to end the week lower.'' Greenspan will probably ``signal patience'' about the need to raise U.S. interest rates, she said.

In other trading, the dollar weakened against the British pound, the Swiss franc and the Australian dollar. Gold futures in New York rose in Asian trading.

The yen fell after Japanese Finance Minister Sadakazu Tanigaki said the G-7's call for ``more flexibility'' was not aimed his country, which will act to halt any rapid gains.

``For Japan, the G-7 is an outright success,'' Jesper Koll, chief Japan analyst in Tokyo at Merrill Lynch Japan Inc. ``It's a full endorsement of their unilateralist intervention policy.''

The Bank of Japan sold a record 5.9 trillion yen ($55.8 billion) last quarter in an effort to prevent the currency's advance from eroding demand for exports. The BOJ sold 1.3 trillion yen on Dec. 10, the fourth-biggest amount sold in a single day.

G-7 Statement

``Excess volatility and disorderly movements in exchange rates are undesirable for economic growth,'' G-7 ministers and central bankers said in a joint statement. ``We emphasize that more flexibility in exchange rates is desirable for major countries or economic areas that lack such flexibility.''

Officials from the G-7, which comprises the U.S., Japan, Germany, France, Italy, Britain and Canada, met for two days of talks in Boca Raton, Florida. The euro has climbed 12 percent against the dollar since the previous G-7 meeting in Dubai on Sept. 20, when the group sought ``more flexibility'' in exchange rates. The words ``excessive volatility'' were absent in Dubai.

Japan's currency has risen as investors outside the country bought assets in the world's second-largest economy, which is emerging from three recessions in the past 12 years. Overseas investors were net buyers of Japanese stocks for a 36th week out of the past 41, the Finance Ministry said last week.

Japan will likely prevent its currency from strengthening beyond 105 per dollar by March 31 because its G-7 counterparts won't oppose it seeking to slow the yen's appreciation, Morgan Stanley Japan Ltd. currency strategist Toru Umemoto said.

``Yen-selling is considered to have obtained the G-7's nod of approval,'' he wrote.