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G20 countries wrap up talks on forex and stability
2007-11-18
Finance chiefs from the G20 economic powers end two days of talks on the global economy on Sunday as a sinking U.S. dollar, a painful credit crunch and soaring oil prices threaten stability. The Group of 20 mostly industrialized and emerging economies were due to release a communique at 6:30 a.m. EST detailing resolutions, with the focus expected to be on currency imbalances and the risks to global growth from credit woes stemming from the U.S. subprime mortgage crisis. Emerging economies were also expected to press for faster reform of the International Monetary Fund and World Bank to give them greater say and voting power at those multilateral organizations, whose leaders attended the meeting. The dollar's fall to record lows against a basket of currencies (.DXY) as credit conditions have deteriorated in global financial markets since August has been a factor driving up the price of key commodities, particularly oil, fuelling inflation and putting world economic growth at risk. Canada's central bank governor, David Dodge, told Canadian reporters by telephone from Kleinmond on Saturday that discussions had made it clear the downside risks to world growth had increased. "It's quite clear that the global financial turbulence that we were experiencing then (in October) is now going to be more prolonged and the volatility is likely to continue to be higher for longer, certainly longer than we anticipated when we met at the IMF last month," he said. Canadian Finance Minister Jim Flaherty said on the same call that he had told his G20 colleagues the Canadian dollar had borne a disproportionate share of the fallout from the U.S. dollar's decline, causing problems for the export-reliant economy. European finance ministers from euro zone economies feel much the same about the dollar's fall to record lows versus the euro. But Flaherty played down the prospect of a sharply worded statement on foreign exchange issues from the G20 meeting, even though he said countries such as South Africa and Brazil had expressed similar concerns. Canada joined the U.S. and Europe in singling out China as a country that has not let its currency adjust sufficiently to market forces. That has forced countries with floating currencies to adjust more sharply to global imbalances caused by a gaping U.S. trade deficit and China's huge surplus. (Reporting by Gordon Bell; Editing by Alan Raybould)
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