Germany seeks action on weak dollar
19 November 2004
BERLIN – Faced with the prospect of a further sell off of the dollar, German Finance Minister Hans Eichel called Friday on the world’s financial superpowers to try to hammer out an agreement on dealing with the weaker greenback.
Speaking ahead of a meeting of the Group of 20 (G20) rich and emerging nations Eichel told German radio: “We will have to wait and see if we sit down in the group of three (US, Japan and the Europeans) and try to come to a common solution.”
“It cannot be in the interests of America to accept a rapid fall of the dollar,” Eichel said.
The Berlin gathering of the G20 central bankers and finance ministers was due to kick off Friday with Eichel hosting a dinner for the participants before the conference’s work sessions begin Saturday.
Setting the stage for the weekend meeting will be a podium discussion in Frankfurt on Friday which is to be attended by both European Central Bank chief Jean-Claude Trichet and US Federal Reserve chairman Alan Greenspan.
The chiefs of the world’s two leading central banks are also to meet as part of the weekend deliberations in Berlin, which is also expected to include a meeting of the Group of Seven (G7) leading industrial nations.
Germany currently chairs the G20, whose 19 members also include Argentina, Australia, Brazil, Canada, China, France, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the U.S. The G7 comprises Britain, the U.S., Germany, France, Canada, Britain and Japan.
The Berlin meeting also comes at a critical time for the global economy with a raft of indicators pointing to this year’s jump in oil prices as leading to growth starting to slow in three of the world’s key economic blocs – the U.S., Japan and the eurozone.
Despite signs that oil prices may have started to stabilise at least for the time being, economists believe that it is still too early to call the all clear on energy costs, which means that oil prices will also be a focus of the deliberations in the German capital.
“Altogether the risks for global growth next year have increased somewhat due to the oil price and the development of the exchange rate,” Germany’s Deputy Finance Minister Caio Koch-Weser told the daily Financial Times Deutschland Friday.
The dollar was hovering around all-time lows against the euro in the run-up to the meeting after it plunged to a record low against the euro of USD 1.3074 with the greenback’s fall adding to global economic tensions.
Launched in 1999, the euro has climbed by almost 60 percent since it plummeted to a record low of 82 US cents in October 2000.
But with the G20 agenda focusing on the need for greater international transparency in taxation and for a stepped-up global effort to tackle money laundering and tax havens, Eichel told the daily Frankfurter Allgemeine Zeitung Friday that currencies would not form part of the weekend talks in Berlin. “The G20 is not the forum for discussing exchange rates,” he said.
Echoing remarks earlier this month by Trichet, Eichel described the euro’s surge against the dollar and the current state of the currency markets as “brutal”.
Nevertheless, Eichel said that the current exchange rate did present advantages, saying for example, that the weak dollar helped to stem the impact of high dollar-denominated oil prices.
Subject: German news