Geithner Says Major Currencies Roughly in Alignment, WSJ Reports
October 20, 2010, 11:07 PM EDT
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By Michael Heath
Oct. 21 (Bloomberg) -- U.S. Treasury Secretary Timothy F. Geithner said the world’s major currencies are “roughly in alignment,” suggesting there is no need for the dollar to decline further, the Wall Street Journal reported.
Geithner emphasized the U.S. isn’t pursuing a deliberate policy of devaluing its currency, the newspaper said, citing an interview before he meets with finance ministers and central bankers from Group of 20 nations in South Korea.
The dollar rose against most of its counterparts after the report was published, climbing to 81.61 yen as of 10:38 a.m. in Tokyo from 81.09 yen in New York yesterday. It touched 80.85 yesterday, the weakest since April 1995, when the post-World War II low of 79.75 was set. The dollar gained to $1.3941 per euro from $1.3964. The yen traded at 113.35 per euro from 113.23.
Geithner told the newspaper the U.S. “would like countries to move toward a set of norms on exchange-rate policy.” The report cited U.S. officials as saying conditions aren’t ripe for a global accord on currencies such as the 1985 Plaza Accord to push the dollar down.
The dollar has dropped since Aug. 27, when Chairman Ben S. Bernanke signaled the Federal Reserve is prepared to ease monetary policy. It is trading near parity against its Australian counterpart for the first time since 1983.
China’s Yuan
In the interview, the Treasury chief divided world currencies into three groups. In one, he put countries with currencies “undervalued by any measure,” especially China’s yuan. He said, though, that if the pace of yuan appreciation seen since September were sustained, it would help correct the undervaluation. Other emerging-markets play a role, he said.
In a second group, he put “emerging economies with flexible exchange rates that intervene or impose taxes to try to reduce the risks of significant overvaluation, of bubbles and of inflationary pressures,” the paper reported. The U.S. isn’t objecting to such efforts, Geithner said.
In the third group, he put “the major currencies, which are roughly in alignment now,” a suggestion that he sees no need for the dollar to sink more than it already has against the euro and yen, according to the newspaper.
Earlier this week in Palo Alto, California, Geithner said that no country can “devalue its way to prosperity and competitiveness.”
--Editors: Brendan Murray, Lily Nonomiya
To contact the reporter on this story: Michael Heath in Sydney at heath1@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang in Singapore at sphang@bloomberg.net
October 20, 2010, 11:07 PM EDT
inShare
E-mailPrint
MORE FROM BUSINESSWEEK
By Michael Heath
Oct. 21 (Bloomberg) -- U.S. Treasury Secretary Timothy F. Geithner said the world’s major currencies are “roughly in alignment,” suggesting there is no need for the dollar to decline further, the Wall Street Journal reported.
Geithner emphasized the U.S. isn’t pursuing a deliberate policy of devaluing its currency, the newspaper said, citing an interview before he meets with finance ministers and central bankers from Group of 20 nations in South Korea.
The dollar rose against most of its counterparts after the report was published, climbing to 81.61 yen as of 10:38 a.m. in Tokyo from 81.09 yen in New York yesterday. It touched 80.85 yesterday, the weakest since April 1995, when the post-World War II low of 79.75 was set. The dollar gained to $1.3941 per euro from $1.3964. The yen traded at 113.35 per euro from 113.23.
Geithner told the newspaper the U.S. “would like countries to move toward a set of norms on exchange-rate policy.” The report cited U.S. officials as saying conditions aren’t ripe for a global accord on currencies such as the 1985 Plaza Accord to push the dollar down.
The dollar has dropped since Aug. 27, when Chairman Ben S. Bernanke signaled the Federal Reserve is prepared to ease monetary policy. It is trading near parity against its Australian counterpart for the first time since 1983.
China’s Yuan
In the interview, the Treasury chief divided world currencies into three groups. In one, he put countries with currencies “undervalued by any measure,” especially China’s yuan. He said, though, that if the pace of yuan appreciation seen since September were sustained, it would help correct the undervaluation. Other emerging-markets play a role, he said.
In a second group, he put “emerging economies with flexible exchange rates that intervene or impose taxes to try to reduce the risks of significant overvaluation, of bubbles and of inflationary pressures,” the paper reported. The U.S. isn’t objecting to such efforts, Geithner said.
In the third group, he put “the major currencies, which are roughly in alignment now,” a suggestion that he sees no need for the dollar to sink more than it already has against the euro and yen, according to the newspaper.
Earlier this week in Palo Alto, California, Geithner said that no country can “devalue its way to prosperity and competitiveness.”
--Editors: Brendan Murray, Lily Nonomiya
To contact the reporter on this story: Michael Heath in Sydney at heath1@bloomberg.net
To contact the editor responsible for this story: Stephanie Phang in Singapore at sphang@bloomberg.net
