Timothy Geithner's call for currency appreciation rattles G20 finance officials
Japan called US Treasury Secretary Timothy Geithner 'unrealistic,' while India doubted he would have support among emerging economies at the G20 summit next month.
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Canada’s finance minister, Jim Flaherty, cited “a desire to reach a consensus” among the ministers but said “some countries need dramatic consolidation” – a warning that the US, like Britain, needs to act effectively to scale down its trillion-dollar budget deficit. Officials also blame the US for devaluing the dollar by printing ever more money – another way of intervening in the market.Skip to next paragraph
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The standoff left the impression that the ministers might well paper over their differences in vague wording promising cooperation but few specifics.
Geithner’s letter made the rounds among ministers and their aides gathered at the Hilton Hotel, a scenic resort area on the edge of this ancient Shilla kingdom capital of temples and palaces, just as he was arriving here. Chinese officials refrained from immediate comment, clearly preferring to avoid open controversy for the moment, while officials of other countries responded frankly in verbiage that seemed quite strong for such a gathering.
Japan calls Geithner 'unrealistic'
Geithner’s letter drew a quick rejoinder from Japan’s finance minister. Yoshihiko Noda said Geithner’s proposal for targets for redressing imbalances was “unrealistic” and “difficult.” Strong “volatility is in currency markets,” he said, would be “harmful to the stability of the global economy and financial system.”
Officials from the emerging economies of so-called BRIC countries – Brazil, Russia, India, and China – derided the US warning. Russia’s deputy finance minister, Dmitry Pankin, said bluntly that he did not think the US would succeed in attempting “to put the question of exchange rates and current account balances at the top of the agenda, to try to press China to make some commitments.”
Or, as an Indian finance official was quoted telling Reuters, he doubted if “very many emerging economies” would be in favor of “artificially linking current account deficit levels” to a country’s gross domestic product, as Geithner is suggesting.