G-20 shuns action to halt dollar slide<\/p>\n
Veronica Smith, Agence France-Presse\/Berlin<\/p>\n
The Group of 20 finance chiefs have shunned action to halt the
\ndollar slide, leaving Europe isolated at the end of a forum here
\non Sunday and facing an almost certain further strengthening of
\nthe euro.<\/p>\n
Worried European Union policy-makers, afraid the euro's
\nstrength will undermine the eurozone's fragile, export-led
\neconomic recovery, found no concrete support among the major
\nwealthy and emerging economies.<\/p>\n
The G-20 finance ministers and central bank governors, while
\nlamenting the \"worrying\" weakness of the dollar, which hit an
\nall-time low against the euro last week, agreed to apply various
\neconomic remedies but showed no appetite for market intervention
\nin Saturday's working session.<\/p>\n
China, rebuffing Western pressure to loosen the yuan's peg to
\nthe dollar and share the EU burden of higher-priced exports, said
\nit was too soon to talk about it.<\/p>\n
A bright note, however, was struck on the sidelines of the
\nmeeting by Germany: word of a framework agreement by the Paris
\nClub of creditor nations to forgive up to 80 percent of Iraqi
\ndebt.<\/p>\n
Huddled behind closed doors on Saturday, the G-20 delegations
\nof the Group of Seven industrialized nations, the European Union
\nand the principal emerging economies tackled a range of finance
\nissues but the weak dollar, and the high price of oil, dominated
\ndiscussions.<\/p>\n
The German finance minister, Hans Eichel, said the G-20 had
\nagreed that global economic imbalances should not lead to abrupt
\nmovements in foreign exchange rates.<\/p>\n
\"The imbalances that are undoubtedly in the world economy
\nshould not lead to abrupt changes -- we don't want that in the
\noil price or in exchange rates,\" he told reporters.<\/p>\n
Eichel said everyone had to play his part in helping to
\ncorrect the global economic imbalances.<\/p>\n
He said necessary measures included \"budgetary consolidation
\nin the United States -- (U.S. Treasury Secretary) John Snow
\nexplicitly agreed with that -- growth-promoting structural
\nreforms in Europe and in Japan, and more (currency) flexibility
\nin Southeast Asia\".<\/p>\n
\"Those are generally the tasks that everyone has to solve and
\nthat everyone agreed to around the table,\" he said.<\/p>\n
Meanwhile, U.S. President George W. Bush, speaking in Santiago
\nwhere he was attending an Asia-Pacific Economic Cooperation forum
\nsummit, insisted he was committed to a strong dollar, despite its
\nslide against Asian currencies and the euro.<\/p>\n
Back in Berlin, German Chancellor Gerhard Schroeder called on
\ncentral bank intervention to boost the dollar.<\/p>\n
\"The European Central Bank and also other central banks should
\nthink about doing something themselves, in all respect to their
\nindependence,\" Schroeder told reporters on the sidelines of the
\nmeeting.<\/p>\n
Schroeder, noting that the dollar's decline was due to the
\nhuge U.S. current account and budget deficits, said: \"Clearly a
\npartnership means that you have to do something about it.\"<\/p>\n
The German chancellor's call apparently fell on deaf ears. A
\nsource close to the German government said none of the G-20
\nparticipants had voiced support for intervention in the forex
\nmarkets to strengthen the dollar.<\/p>\n
For its part China, which takes over the G-20 presidency from
\nGermany next year, reiterated resistance to moving the yuan --
\nwhich has been pegged at about 8.3 to the dollar for the past 10
\nyears -- to a more flexible exchange rate regime.<\/p>\n
\"It is still not the stage to talk about a specific technical
\narrangement,\" Zhou Xiaochuan, governor of the People's Bank of
\nChina, told journalists.<\/p>\n
Also heading the G-20 agenda was the rise in oil prices, and
\nthe means to address supply and demand in the medium term.<\/p>\n
According to a draft annex to a final statement obtained by
\nAFP late on Saturday, the finance chiefs expect the price of oil
\nto drop to between US$35 to $40 a barrel in the medium term.<\/p>\n
However, they expect oil-producing countries to have little
\nfree capacity until 2010 due to inadequate investment, meaning
\nprices will be sensitive to unexpected changes in demand and
\nsupply.<\/p>\n
The price of a barrel of crude rose more than $2 to over $48
\non Friday on worries about supply as winter looms in the United
\nStates and Europe and about problems at a refinery in Venezuela.<\/p>\n
Meanwhile in Paris, Paris Club creditor nations were
\nfinalizing the details of their agreement to wipe out about a
\nthird of war-torn Iraq's crippling $120 billion international
\ndebt burden.<\/p>",
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