Eurozone ministers press China on exchange rates
Wednesday, 10 October 2007
LUXEMBOURG, Oct 9 (AFP): Eurozone finance ministers yesterday ratcheted up pressure on China to adjust the value of the yuan although they struggled with differences over the strength of the euro.
The ministers, gathered in Luxembourg, thrashed out a common position on exchange rates to bring to a meeting next week in Washington of finance chiefs from the Group of Seven (G7) richest countries.
While sticking to their usual well-worn statement describing "excessive volatility" on foreign exchange markets as "undesirable", this time they also singled out China with a call for action to adjust the yuan's exchange rate.
"In emerging countries with large and growing current account surpluses, especially China, it is desirable that their effective exchange rates move so that necessary adjustments occur," the ministers said in an agreed statement.
China regularly comes under fire for artificially keeping down the value of its currency in order make its exports cheaper on international markets, which also has the effect of lifting the value of the euro.
Ministers also agreed to dispatch a delegation of Eurozone powerbrokers to China to raise their concerns about exchange rates face-to-face with Chinese authorities.
ECB president Jean-Claude Trichet, EU Economic Affairs Commissioner Joaquin Almunia and chairman of the Eurogroup of finance ministers Jean-Claude Juncker would make the trip "by the end of this year," Juncker said.
But while China was specifically in the crosshairs, the ministers also took aim at the United States and Japan in a common message that the Eurozone is to deliver at the G7 meeting.
"Concerning the dollar, we have noted with great attention that the US authorities have reaffirmed that a strong dollar is in the interest of the US economy," they said in the statement.
On the Japanese yen, the ministers voiced concern that it too was undervalued and said that because Tokyo acknowledged that Japan was on a "sustainable growth path" that that "should be recognised by market participants."
With the euro on a record-smashing run, some Eurozone members are becoming increasingly impatient for China, Japan and the United States to take more action to strengthen their currencies.
While Paris has long decried the euro's strength, which hurts Eurozone exporters, the chorus of concern has grown since the shared European currency struck a historic high of 1.4283 dollars last Monday.
Italian Prime Minister Romano Prodi acknowledged last week that he was "concerned" about the euro's strength and accused the United States of looking only after its "domestic interests" in its exchange rate policy.
The president of the BusinessEurope association of EU employers, Ernest Antoine Seilliere, urged the chairman of the Eurogroup of finance ministers, Jean-Claude Juncker, "to raise your voice and defend euro area interests" at the upcoming G7 meeting.
The ministers, gathered in Luxembourg, thrashed out a common position on exchange rates to bring to a meeting next week in Washington of finance chiefs from the Group of Seven (G7) richest countries.
While sticking to their usual well-worn statement describing "excessive volatility" on foreign exchange markets as "undesirable", this time they also singled out China with a call for action to adjust the yuan's exchange rate.
"In emerging countries with large and growing current account surpluses, especially China, it is desirable that their effective exchange rates move so that necessary adjustments occur," the ministers said in an agreed statement.
China regularly comes under fire for artificially keeping down the value of its currency in order make its exports cheaper on international markets, which also has the effect of lifting the value of the euro.
Ministers also agreed to dispatch a delegation of Eurozone powerbrokers to China to raise their concerns about exchange rates face-to-face with Chinese authorities.
ECB president Jean-Claude Trichet, EU Economic Affairs Commissioner Joaquin Almunia and chairman of the Eurogroup of finance ministers Jean-Claude Juncker would make the trip "by the end of this year," Juncker said.
But while China was specifically in the crosshairs, the ministers also took aim at the United States and Japan in a common message that the Eurozone is to deliver at the G7 meeting.
"Concerning the dollar, we have noted with great attention that the US authorities have reaffirmed that a strong dollar is in the interest of the US economy," they said in the statement.
On the Japanese yen, the ministers voiced concern that it too was undervalued and said that because Tokyo acknowledged that Japan was on a "sustainable growth path" that that "should be recognised by market participants."
With the euro on a record-smashing run, some Eurozone members are becoming increasingly impatient for China, Japan and the United States to take more action to strengthen their currencies.
While Paris has long decried the euro's strength, which hurts Eurozone exporters, the chorus of concern has grown since the shared European currency struck a historic high of 1.4283 dollars last Monday.
Italian Prime Minister Romano Prodi acknowledged last week that he was "concerned" about the euro's strength and accused the United States of looking only after its "domestic interests" in its exchange rate policy.
The president of the BusinessEurope association of EU employers, Ernest Antoine Seilliere, urged the chairman of the Eurogroup of finance ministers, Jean-Claude Juncker, "to raise your voice and defend euro area interests" at the upcoming G7 meeting.