G7 Shows Scant Public Concern for Dollar
>>Snow's description of a "strong" dollar on Saturday also revealed that a high exchange rate with the world's other major currencies was not necessarily part of his view.
Asked what he meant by "strong" in Washington's long-running policy, Snow said: "What you want to be strong is (that) you want people to have confidence in your currency, you want them to see a currency as a good medium of exchange."
"You want the currency to be a good store of value. You want it to be something people are willing to hold. You want it to be hard to counterfeit...those are the qualities," he added.
Pressed to say whether he considered the value of the dollar to be among the qualities that he used to define a strong currency, Snow said, "That reflects the fundamentals of the demand and supply for currencies." <<
Reuters
Saturday, May 17, 2003; 4:51 PM
By Mike Dolan
DEAUVILLE, France (Reuters) - The world's finance chiefs on Saturday omitted referring to volatile world currencies in a post-meeting public statement, a move that may be seen by markets as endorsing the recent U.S. dollar slide.
Ministers from the Group of Seven (G7) richest nations, famous for its dramatic currency market interventions in the 1980s, told reporters after the meeting they agreed to avoid explicit reference to foreign exchange markets due to the absence of their central bankers.
Meetings without the bankers avoid written references to currencies, they said.
They also said currencies were discussed as part of a general economic assessment and there was agreement to continue to monitor markets and cooperate if action was necessary -- a line that is often included in their communiques.
But the absence of this standard reference to currencies is marked at a time when the dollar has fallen steeply to near four-year lows against the euro and two-year lows against Japan's yen and is likely to fuel the view the G7 is relaxed about these trends.
Last year's pre-summit meeting of G7 finance ministers in Halifax, Canada also omitted any reference to currencies when central bankers where absent, but the dollar drop has accelerated sharply since then and has caused concerns in Japan and Europe. Comments on Saturday from U.S. Treasury Secretary John Snow stoked the view that governments are comfortable with current foreign exchange rates -- showing that the United States at least was not strongly opposed to the dollar's fall.
"There was a general discussion of the backdrop against which the world economy is functioning, and part of that backdrop is the really fairly modest realignment of currencies that has occurred," Snow told reporters.
Snow, who added pressure the dollar's decline this week by saying a weaker dollar was good for U.S. exports, has frequently qualified the U.S. Treasury's long-standing "strong dollar" policy from Clinton administration in the 1990's boom years.
Snow's description of a "strong" dollar on Saturday also revealed that a high exchange rate with the world's other major currencies was not necessarily part of his view.
Asked what he meant by "strong" in Washington's long-running policy, Snow said: "What you want to be strong is (that) you want people to have confidence in your currency, you want them to see a currency as a good medium of exchange."
"You want the currency to be a good store of value. You want it to be something people are willing to hold. You want it to be hard to counterfeit...those are the qualities," he added.
Pressed to say whether he considered the value of the dollar to be among the qualities that he used to define a strong currency, Snow said, "That reflects the fundamentals of the demand and supply for currencies."
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