October 20, 2007	Saturday	Shawwal 7, 1428

WASHINGTON, Oct 19: Finance chiefs from the world’s richest countries met here on Friday to debate global economic prospects amid mounting exchange rate tension and financial market upheaval that threatens worldwide growth.

US Treasury Secretary Henry Paulson hosted a meeting of Group of Seven finance ministers and central bankers at the Treasury ahead of weekend sessions of the International Monetary Fund and the World Bank.

While officials will likely present a united front in public, discord could occur behind closed doors over financial market instability and currency alignments.

The G7, grouping Britain, Canada, France, Germany, Italy, Japan and the United States, will issue a closely-watched communique later on Friday on the global economy.

But analysts do not foresee any signal from the meeting that would affect current exchange rate trends, notably a steady slide in the dollar against the euro, which has unsettled eurozone officials, as well as what is seen as an unfairly undervalued Chinese yuan.US Treasury Under Secretary David McCormick said on Thursday that financial market turmoil would likely take up a “good part” of the G7 meeting, particularly as the IMF on Wednesday slashed its 2008 global economic forecast.

The IMF in a twice-yearly survey warned that turbulence stemming from a meltdown in the US sub-prime -- or high-risk -- mortgage market could crimp growth worldwide.

G7 participants may in fact find it easier to agree a common stance on recent market turbulence than on currencies, trade imbalances and exchange rate risks.

Some economists said that exchange rate criticism could be aimed at China rather than the United States, despite the euro’s record spike against the dollar and European pressure for Washington to boost the greenback.

“Part of the focus on the renmimbi (yuan) comes because the G7 is split on the dangers of the euro’s recent rise against the dollar while all the members of the powerful bloc of economies can agree that China must allow its exchange rate to rise faster, particularly against the euro,” Robert Brusca, a chief economist at FAO Economics, said in a briefing note.

The euro hit a new high of $1.4319 on Friday on concerns about US economic momentum.

US officials have criticized Beijing for not allowing the yuan to appreciate further amid America’s gaping trade deficit with China.—AFP