By Noah Barkin and Nick Antonovics
BERLIN (Reuters) - Europe and the United States kept up a war of words over the sliding U.S. dollar at a G20 meeting of rich and developing nations, blaming each other for the currency's fall and avoiding new steps or rhetoric to halt it.
A communique issued by the G20 made no explicit reference to currency swings on Sunday, despite mounting concern in Europe and Japan over the dollar's slide and ballooning U.S. deficits.
Economists said it would do nothing to help the dollar after the greenback fell last week to a record low of $1.3074 against the euro and its weakest level in four years against the yen.
"I would be lying to say that we did not talk about it," German Finance Minister Hans Eichel said, asked if the meeting he had hosted had discussed currency market volatility.
Leading European countries are worried that the euro's strength against the dollar will damage economic recovery hopes by making their exports more expensive abroad.
"The absence of any hint of coordination or cooperation simply gives the market a green light to keep selling the dollar," said George Magnus, senior economic adviser at UBS Investment Bank in London.
He said the dollar could head to $1.50 to the euro over the next 12 to 18 months and fall to 90 yen.
In an escalating war of words, European policymakers have blamed the U.S. currency's slide on the huge U.S. budget and current account deficits. The United States has countered that Europe and Japan must do more to boost growth.
Both stuck to their guns over the weekend, while urging Asian economies to move toward "greater exchange rate flexibility" -- a couched reference to China's pegged yuan exchange rate.
BLAME GAME
Officials had said ahead of the meeting that the G20 was not the proper forum for discussing exchange rates and Eichel reiterated that line when pressed for more specific currency comment on Sunday.
Analysts said the G20 statement reflected a lack of agreement about who is responsible for dollar weakness and ballooning U.S. deficits as well as fundamental differences over how to resolve these two issues. They predicted a further weakening of the dollar this week.
"It is clear that the two sides are as far away as ever on agreeing how to resolve imbalances and dollar weakness," said Kit Juckes, chief strategist at RBS Markets in London. "Passing the blame to the Chinese seems to be the only thing that everyone can agree on."
Following a critique of U.S. policies from German Chancellor Gerhard Schroeder on Saturday, U.S. Treasury Secretary John Snow said his country was committed to cutting its record budget deficit in half over the next 4 years.
But in a swipe back at Europe, he said all countries were responsible for boosting growth and correcting trade imbalances.
"Growth among our trading partners -- including those here in Europe also needs to increase and that requires addressing structural barriers that stand in the way of better performance," said Snow.
Earlier this month, both Germany and France reported unexpectedly weak third quarter gross domestic product growth of 0.1 percent.
OIL A RISK TO OUTLOOK
The G20 said the global economic environment would remain positive in 2005 but cited a number of risks to the outlook.
"We expect that the macroeconomic environment will remain favorable in the next year," the communique read. "However, downside risks have increased due to oil price volatility, persisting external imbalances and geopolitical concerns."
Eichel singled out oil as the most significant risk to the global economy.
In the communique, the G20 encouraged the promotion of energy efficiency and sustainability, urged investment in oil capacity and an increase in the dialogue between oil consumers and producers in order to bring about stability in oil markets.
At the weekend meeting, the United States and Germany also brokered a multi-national agreement to forgive up to $33 billion of Iraq (news - web sites)'s debts, helping mend ties strained by the Iraq war.
G20 countries also agreed to new guidelines on sovereign debt restructuring, but Argentina ducked out of the deal, failing to show up in Berlin and drawing warnings of "isolation" from other countries.
(Additional reporting by Daniel Flynn, Iain Rogers, Guido Bohsem, Stella Dawson, Bei-Bei She, Glenn Somerville)
Source: http://story.news.yahoo.com/news?tmpl=story&u=/nm/20041121/bs_nm/economy_g20_dc_6
Bush is great for the economy...if you live in Europe. For this reason, I'm glad Bush won, so he can take the blame for our further tanking economy. It will cure some intelligent republicans to not vote for republican candidate in next election for sure. Keep it up, Bush! I am rooting for you to tanking our economy more! You rock! Ya Da Man!
BERLIN (Reuters) - Europe and the United States kept up a war of words over the sliding U.S. dollar at a G20 meeting of rich and developing nations, blaming each other for the currency's fall and avoiding new steps or rhetoric to halt it.
A communique issued by the G20 made no explicit reference to currency swings on Sunday, despite mounting concern in Europe and Japan over the dollar's slide and ballooning U.S. deficits.
Economists said it would do nothing to help the dollar after the greenback fell last week to a record low of $1.3074 against the euro and its weakest level in four years against the yen.
"I would be lying to say that we did not talk about it," German Finance Minister Hans Eichel said, asked if the meeting he had hosted had discussed currency market volatility.
Leading European countries are worried that the euro's strength against the dollar will damage economic recovery hopes by making their exports more expensive abroad.
"The absence of any hint of coordination or cooperation simply gives the market a green light to keep selling the dollar," said George Magnus, senior economic adviser at UBS Investment Bank in London.
He said the dollar could head to $1.50 to the euro over the next 12 to 18 months and fall to 90 yen.
In an escalating war of words, European policymakers have blamed the U.S. currency's slide on the huge U.S. budget and current account deficits. The United States has countered that Europe and Japan must do more to boost growth.
Both stuck to their guns over the weekend, while urging Asian economies to move toward "greater exchange rate flexibility" -- a couched reference to China's pegged yuan exchange rate.
BLAME GAME
Officials had said ahead of the meeting that the G20 was not the proper forum for discussing exchange rates and Eichel reiterated that line when pressed for more specific currency comment on Sunday.
Analysts said the G20 statement reflected a lack of agreement about who is responsible for dollar weakness and ballooning U.S. deficits as well as fundamental differences over how to resolve these two issues. They predicted a further weakening of the dollar this week.
"It is clear that the two sides are as far away as ever on agreeing how to resolve imbalances and dollar weakness," said Kit Juckes, chief strategist at RBS Markets in London. "Passing the blame to the Chinese seems to be the only thing that everyone can agree on."
Following a critique of U.S. policies from German Chancellor Gerhard Schroeder on Saturday, U.S. Treasury Secretary John Snow said his country was committed to cutting its record budget deficit in half over the next 4 years.
But in a swipe back at Europe, he said all countries were responsible for boosting growth and correcting trade imbalances.
"Growth among our trading partners -- including those here in Europe also needs to increase and that requires addressing structural barriers that stand in the way of better performance," said Snow.
Earlier this month, both Germany and France reported unexpectedly weak third quarter gross domestic product growth of 0.1 percent.
OIL A RISK TO OUTLOOK
The G20 said the global economic environment would remain positive in 2005 but cited a number of risks to the outlook.
"We expect that the macroeconomic environment will remain favorable in the next year," the communique read. "However, downside risks have increased due to oil price volatility, persisting external imbalances and geopolitical concerns."
Eichel singled out oil as the most significant risk to the global economy.
In the communique, the G20 encouraged the promotion of energy efficiency and sustainability, urged investment in oil capacity and an increase in the dialogue between oil consumers and producers in order to bring about stability in oil markets.
At the weekend meeting, the United States and Germany also brokered a multi-national agreement to forgive up to $33 billion of Iraq (news - web sites)'s debts, helping mend ties strained by the Iraq war.
G20 countries also agreed to new guidelines on sovereign debt restructuring, but Argentina ducked out of the deal, failing to show up in Berlin and drawing warnings of "isolation" from other countries.
(Additional reporting by Daniel Flynn, Iain Rogers, Guido Bohsem, Stella Dawson, Bei-Bei She, Glenn Somerville)
Source: http://story.news.yahoo.com/news?tmpl=story&u=/nm/20041121/bs_nm/economy_g20_dc_6
Bush is great for the economy...if you live in Europe. For this reason, I'm glad Bush won, so he can take the blame for our further tanking economy. It will cure some intelligent republicans to not vote for republican candidate in next election for sure. Keep it up, Bush! I am rooting for you to tanking our economy more! You rock! Ya Da Man!
Last edited: