DJ LIVE: News And Notes From IMF, World Bank Annual Meetings In Washington
09-Oct-2010
The International Monetary Fund and World Bank are holding annual meetings in Washington where world financial leaders are grappling with how to fuel a more balanced global economic recovery and avoid a possible global currencies war. The meetings, a stepping stone toward a major gathering of Group of 20 political leaders in Seoul in mid-November, are expected to offer glimpses on how a number of global economic issues might be addressed or not addressed by world leaders.
(12:25 EDT) French Finance Minister Christine Lagarde tried to bring a touch of grace to fractious talks on currencies at this weekend's IMF meetings by saying she is not in a "mood for war on currencies." Attempting to cash in on the popularity she acquired with fellow ministers during the financial crisis, she appears to be trying to convince them that being in a mood for peace is more likely to bring success than U.S. Treasury Secretary Timothy Geithner's strong tone to achieve agreement on rebalancing of the global economy and getting China to allow more flexibility on the yuan. The French are wary that petulant talk on currencies could get in the way of their own agenda for the upcoming G-20 presidency in November, when President Nicolas Sarkozy hopes to set the basis of a more efficient international monetary system. Rather than confront currency levels head-on, the French are hoping to tackle the issue in a more oblique way, through financial safety nets and capital flow controls. It remains to be seen whether the exclusive Pierre Herme macarons, an almond-based confection, Lagarde brought her Group of Seven colleagues for dinner Friday night have succeeded in relaxing the atmosphere. (Nathalie Boschat)
(11:40 EDT) Even oil cartel OPEC gets a say at the annual IMF meeting. In a statement to the fund's advisory body, the Organization of Petroleum Exporting Countries said demand for its crude oil was only forecast to grow next year by 200,000 barrels a day as the global financial crisis continues to take a toll on the economy. Total demand is seen increasing by one million b/d next year, with the bulk of new consumption coming from emerging countries such as China and India and in Latin America. Non-OPEC supply, including oil and natural gas liquids, is expected to grow by 900,000 b/d this year but only by 400,000 b/d in 2011. (Ian Talley)
(11:30 EDT) Apropos of building forex strains, the IMF's policy and strategy advisory board, the International Monetary and Financial Committee, Saturday was consumed with the issue. Aside from putting currencies officially on the agenda--one topic item is titled, "Perspectives from selected currency areas"--top financial leaders also highlighted the issue in their statements to the panel. Geithner urged the IMF to exercise greater oversight and candor on exchange rate and market-distorting reserve accumulations. And in a rare explicit linking of the currency problems with China, European Commissioner for Economic and Monetary Affairs Olli Rehn called for China to make exchange-rate regime more flexible so that the global financial system is not subject to volatility and instability. (Ian Talley)
(11:15 EDT) Provocative language is certainly one way to turn heads your way and Brazilian Finance Minister Guido Mantega has no problem saying that was precisely his goal when he invoked a worldwide "currency war" and "trade war." The issue is that there is an "undeclared currency war" in which "each day every country is taking their own exchange-rate measures leading to exchange-rate imbalance," he said Friday night, adding that he plans to put this on the agenda for the G-20 leaders summit in Seoul set for November. The source of these imbalances is that developed economies like Germany and the U.S. shorted their fiscal stimulus measures and are instead trying to rely on ultra-loose monetary policies, which only go so far, he said. It's no surprise he wanted to flag the issue since Brazil has been on the receiving end of the "excessive dollar liquidity." The solution: "developed economies must rethink, reposition fiscal policies." (Kejal Vyas)
(10:29 EDT) Hungary's central bank governor, Andras Simor, was very circumspect on Saturday morning about when his country might join the euro zone and adopt the single currency. Pressed a couple of times on the matter on a panel discussion with several European Central Bank members, Simor said it was a matter for the government--even while he said Hungary needed to "speed up" its integration within the euro zone. But there was one thing Simor was certain of. Asked by the British panel moderator whether Hungary would join the euro before infamously euro-skeptic Britain ever decided to, he said, "Yes. Absolutely." (Laurence Norman)
(9:18 EDT) G-7 finance leaders dined privately Friday night during the annual IMF and World Bank meetings and though the dinner was an informal gathering among the items discussed was Japan's recent intervention aimed at restraining the strength of the yen. "Excessive fluctuations in exchange rates have a negative impact on Japan's economy and thus can't be overlooked," Japanese Finance Minister Yoshihiko Noda told the Japanese press at a midnight briefing that followed the dinner. Noda said he gave a speech at the G-7 dinner explaining Japan's actions but "can't say assertively" what his peers thought because his remarks "didn't lead to broader debates." (Takashi Nakamichi)
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(END) Dow Jones Newswires
October 09, 2010 12:35 ET (16:35 GMT) |
