December 11, 2007	Tuesday	Ziqa’ad 30, 1428

TOKYO, Dec 10: Group of Seven policymakers are planning to meet in Tokyo on Feb 8, G7 sources have told Reuters, amid signs that Germany at least might push for a new common declaration on the dollar if the US currency keeps sliding.

Japan takes over the presidency of the G7 group – which comprises the United States, Japan, Germany, Britain, France, Italy and Canada -- from Germany in 2008 and will host the finance ministers and central bankers’ regular get-together.

The rich nations’ club last met in October in Washington where they turned up the heat on China to let its currency rise faster, making no explicit mention of European concerns that a falling dollar is hurting euro zone competitiveness.

But with the dollar weaker since and expected to fall further if US interest rates keep falling while euro zone ones hold pat, there has been a feeling in European capitals that something needs to be done.

The single currency, first launched on Jan 1, 1999, is already up around 20pc against the dollar in the last two years.

“At the moment we have a disorderly adjustment and unwinding,” German finance minister Peer Steinbrueck said last week in one of the first signs that Berlin is getting as worried as Paris over the strength of the euro, trading near record highs against the dollar.

Talking about the G7 communique which could come out after the Tokyo meeting, Steinbrueck said: “It’s possible that not only the punctuation changes but that the sentence in brackets with regard to the dollar might be more stringent.”

G7 sources, however, say the Europeans have still to take a common line and so far their approach has been fragmented.

Regardless, their pleas are likely to fall on deaf ears as far as Washington is concerned. The Bush administration has repeated its line that a strong dollar is in US interests but has shown little appetite to buck market trends.

Britain also wants foreign exchange rates to be set by markets and has shown little interest in igniting a debate over what the G7 can do. Nor does there seem to be too much pressure in Tokyo for a change in G7 language now. But Bank of England Governor Mervyn King noted last month that currency tensions were rising and the higher level of the euro was “dampening off one of the buoyant sources of demand in the euro area, namely exports.”

— Reuters