09 February 2004	Monday	17 Zilhaj 1424

BOCA RATON: Like the matching G7 ties they wore around their starched collars, the finance chiefs of the world's leading industrial economies demonstrated the sort of unity on Saturday that no one expected.

The ties bore little symbols for the dollar, euro, yen and British pound on a blue background - the images of industrial might somewhat frayed by the economic downturn that ushered in the third millennium.

Expressing confidence that the global economic outlook was improving, the finance ministers and central bankers of the United States, Canada, Italy, France, Germany, Japan and Great Britain defied expectations and pushed through an unusually strong and unified signal: too much currency volatility is unhealthy for the world's economy.

For the Europeans, it meant that the dollar's plunge would not be allowed to continue without intervention. With a pledge to monitor the markets carefully and cooperate accordingly, the finance leaders fell back on an old formula.

But it was a veiled warning to currency dealers: The leading industrial nations will probably not stand by during periods of extreme currency fluctuations. The reopening of currency markets on Monday will tell the tale.

In the absence of any clear guidelines, possible steps left much room for speculation: A possible interest rate drop in Europe and an increase in the United States, to attract investment and boost the dollar's value? Or perhaps even direct intervention in the currency markets, like the massive moves by the Japanese government in the past months to block the upward pressure on the yen.

One after another, the finance ministers demurred to bring the possible moves into sharper focus. "Further comments simply make the issue less clear," said Germany's Finance Minister Hans Eichel, who said he was otherwise satisfied with the declaration.

The G7 ministers, who preside over two-thirds of the world's economy, meet four times a year, and every time it's the same: immense expectations and the danger that their signals will be misread, sending chaos into the markets. The finance chiefs are practised in verbal acrobatics and avoidance of too much precision.

But vague formulations carry their own risk, as the meeting in Dubai in September showed. The ministers advocated more "flexibility" in currency dealings - a hint to Asian countries which, the United States complains, are artificially depressing their currency values to defend their export trade at the expense of American products.

But currency dealers drew another conclusion. "More flexibility" implied an unspoken agreement to allow the dollar fall to continue. The decline has been precipitous since September, at least 10 per cent.

It's also an open question about how seriously committed the individual ministers are to stability in the currency markets. Their interests often run in opposite directions. US treasury secretary John Snow made it clear that the currency debate was only a marginal issue for him. -DPA