Brussels, 15/11/2004 (Agence Europe) - As part of a European tour which will bring him to Berlin at the end of the week to take part in the meeting of G20 Finance Ministers, which is made up of the G7 States plus others such as China, Korea, Russia and Turkey, the American Secretary of the Treasury, John Snow, expressed his support for a strong dollar in Dublin on Monday. Speaking to journalists accompanying him at this stage, he stressed that America's policy was well know, and that a "strong dollar is in favour of American interests".
However, with the Euro approaching its biggest high against the dollar in its history, which it reached last week when its price attained 1.3005 dollar, and with the greenback at its lowest against the yen in seven months, John Snow did not express his support for coordinated intervention on the currency market. On the contrary, he said that it was up to the market to decide: "markets are guided by the basics, and the basics are best determined by operations of open and competitive markets", he indicated.
The situation on the currency markets will be discussed by the Eurogroup, because if it boosts American imports and allows the United States to finance its deficits, this presents risks for the EU, in a context of slowing growth and a faltering internal demand in several Member States. The Finance Ministers of the euro zone, meeting on Monday evening, may have no other option, to reverse the trend, than to stick to the verbal declarations on markets. Despite the strong words of the President of the European Central Bank, Jean-Claude Trichet, against sudden movements in exchange rates last week, it looks as though it will be hard for the Bank to throw itself into action alone and carry out exchange interventions without the involvement of the Americans. Certain economists also feel that the strong appreciation of the euro against the dollar will have positive consequences, especially in terms of inflation and oil prices.