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Patience, Appel says, while Hultberg examines gold''s future as money
9:09p ET Thursday, February 3, 2005
Dear Friend of GATA and Gold:
The Reuters story appended here may be most notable
for observing that, after weeks of clamor from Europe
about the dollar's decline, the dollar seems to have
"stabilized" on the eve of the G7 conference in London
-- perhaps so much so that Treasury Secretary John
Snow doesn't even have to show up. Nothing like a
good smashing of the gold price to get you out of a
bad meeting!
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
Treasury Secretary Snow's Absence from G7 Pushes
Foreign Exchange Agreement Further From Agenda
By Sumeet Desai
Reuters
Thursday, February 3, 2005
http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=7528812
LONDON -- Prospects for a new global accord on currency management
at this weekend's Group of Seven financial summit in London appeared
even more remote on Thursday after U.S. Treasury Secretary John Snow
called in sick.
Officials have already said that the G7 finance ministers and
central bank chiefs are likely to repeat a year-old appeal for less
volatile currency markets and more flexible exchange rate regimes
when they meet over the next two days.
But no major new initiatives are expected to be announced to help
achieve these goals. With Snow unable to attend with a cold, the
chances of any breakthrough seem even less likely.
The G7 officials have been making the same appeal on currencies
since they met in Boca Raton, Florida a year ago.
"The statement is out there and that's what they want to continue
with," U.S. Treasury Undersecretary John Taylor, who will deputise
for Snow, said in Washington on Tuesday.
Nor is China -- at which the call for less rigidity is aimed --
ready to accept demands to free the yuan from its fixed exchange
rate, even though Beijing has once again won itself a seat at the
table with the world's wealthiest nations.
Chinese officials have said that while a freely-traded yuan is the
ultimate goal, they must first focus on other problems such as
fixing the country's banking system.
G7 countries want the Chinese to allow the yuan to rise so that
other nations do not bear the brunt of the dollar's
depreciation. "We will be looking forward to the discussion,"
Chinese central bank governor Zhou Xiaochuan told Reuters in London
on Thursday.
European Central Bank President Jean-Claude Trichet said Beijing was
fully aware of what the G7 wanted. "We have already shipped previous
messages to China and they know exactly what is our own sentiment,"
he said.
Indeed, Italian economy minister Domenico Siniscalco said on
Wednesday that the G7 and China had already discussed the
possibility of pegging the yuan to a basket of world currencies
rather than just the dollar at their last four meetings.
One boon for G7 policymakers is that the dollar's slide late last
year seems to have stabilised. That is particularly welcome to the
meeting's host, British finance minister Gordon Brown, who wants to
concentrate on measures to help the world's poorest.
The dollar hit a record low of $1.3667 per euro in December but has
since settled around $1.30, still around half a dollar weaker than
when the common currency hit its own lifetime nadir in 2000.
"Comments from the G7 seem to imply a comfort with the way the
market is developing and with existing language in the statement,"
said C. Ted Wright, currency strategist at Morgan Stanley in London.
"What has been notable in the run-up to the G7 is the emphasis on
fiscal responsibility by the American delegation. This has clearly
impressed some of the G7 partners, though they would like to see
action to that end."
While London wants to keep focus on debt relief, Brown said on
Thursday that ministers would discuss what steps the U.S. was taking
to tackle its giant current account and budget deficits.
But he added that Europe should press ahead with structural reform
and Japan should overhaul its financial system.
With the language on foreign exchange unlikely to change, Friday's
speech by U.S. Federal Reserve Chairman Alan Greenspan might provoke
more market interest. Greenspan is due to speak at 1345 GMT on
Friday.
The G7 comprises the United States, Britain, France, Germany, Italy,
Canada, and Japan.
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