FINANCE CHIEFS from the world’s seven biggest economies stopped short at the weekend of singling out the weaker dollar for criticism, and stuck to their mantra that “disorderly” swings in currencies threaten economic growth.
“Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability,” G7 ministers and central bankers said after talks in Istanbul, Turkey, at the weekend.
The officials welcomed China’s “continued commitment” to a more flexible currency, which they said would promote balanced international expansion.
The group met at the end of a week in which policymakers from France to Canada signalled worry that a sliding dollar risks impeding their recoveries from the deepest global recession since the second World War. The dollar has dropped 14 per cent against a basket of seven currencies since early March.
“Following the escalated rhetoric, investors may have been braced for some escalation in language,” said Sophia Drossos, co-head for global foreign exchange strategy at Morgan Stanley in New York.
“Since we didn’t get it, I look for the trend of dollar weakness to reassert itself.” – (Bloomberg)
