Print

Email story

Comment

Email editor

G-7 concerns: Asian currency and hedge funds

By ASSOCIATED PRESS
Published February 11, 2007

ESSEN, Germany - China came under renewed pressure Saturday from the Group of Seven to make its yuan more flexible, while Japan emerged from the meeting without a public scolding, despite criticism beforehand that its weakened yen was hurting other economies.

The finance ministers and central bankers from the world's wealthiest nations also called for more vigilance on the rising power of hedge funds, but favored a conciliatory approach toward the industry. They also said major developed economies were showing solid growth, and that added that energy efficiency and diversification - particularly renewable forms - remained a priority.

China's tight control of its currency and huge trade surpluses have raised concerns in the West. The G-7 lauded China's commitment to "rebalance growth," but called on the country to let the yuan have greater flexibility in responding to market movements.

China has amassed more than $1-trillion in foreign currency reserves as it buys dollars to control the value of the yuan - a practice G-7 finance ministers have criticized in the past.

Ahead of the meeting, Japan had faced complaints from the euro zone that its weakening yen was giving the country an unfair competitive edge, making Japanese goods cheaper than those in the EU.

But Japan was left out the G-7's declaration on foreign currency issues, while China was mentioned by name.

Germany has made dealing with hedge funds a priority given their rising influence over companies. Finance Minister Peer Steinbrueck has said the country wants G-7 nations and EU countries to try to pre-empt risks that speculative hedge funds may pose to the global financial system.

[Last modified February 11, 2007, 01:19:03]