EU worried over great dollar slide
BERLIN (Reuters) – European leaders heightened their calls for calm in currency markets at G20 meetings this weekend but won no support from the United States for slowing the sliding US dollar. This leaves the European Central Bank alone in coping with economic fallout from a soaring single currency, which is heading fast toward $1.35 and threatens to slow growth in a 12-nation region where recovery is already losing steam. German Finance Minister Hans Eichel said yesterday that sharp currency moves endanger growth. But US Treasury Secretary John Snow refused to address the US dollar as two days of meetings with finance ministers and central bankers from top industrial and major emerging nations drew to a close. He said foreign exchange was not on the agenda. European Central Bank President Jean-Claude Trichet also was silent, giving no public briefings. Lacking any global accord to stem the dollar’s descent, Trichet is likely to face mounting political pressure at home to act if the single European currency – which hit a record high last week at $1.3074 – keeps on climbing. Further climbs are exactly what currency dealers expect. «The US dollar policy still seems to be one of benign neglect,» said Philip Shaw, chief economist at Investec in London. «Our prediction is that the euro will be at $1.33 at the end of the year.» One European financial official said there was a consensus within Europe that scope for ECB rate cuts was limited. Rates already are at a record low of 2 percent, and inflation is heating up.
