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Text of G-7 communique from Boca Raton
5:45p ET Saturday, February 7, 2004
Dear Friend of GATA and Gold:
As you may see from the news service stories appended
here, the G-7 conference communique from Boca Raton
seems mainly to have invited Japan and China to be more
quot;flexiblequot; with their currencies, to debase them less
amid the debasement of the U.S. dollar -- Japan and
China being the two major economic powers not having
been represented at the conference.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
G-7 Condemns 'Excessive Volatility' in Currencies
By Simon Kennedy
Bloomberg News Service
5:19p ET Saturday, February 7, 2004
BOCA RATON, Fla. -- The Group of Seven industrial nations
said exchange rates should be flexible and avoid quot;excessive
volatility,quot; giving European ministers language they sought to
help ease the euro's surge against the dollar. The G-7
outlined no specific steps to reach the goal.
quot;Excess volatility and disorderly movements in exchange rates
are undesirable for economic growth,quot; the G-7 finance ministers
and central bankers said in a statement at the end of their
two-day meeting here. quot;In this context we emphasize that more
flexibility in exchange rates is desirable for major countries or
economic areas that lack such flexibility.quot;
U.S. Treasury Secretary John Snow's effort to focus talks
mainly on quot;anemicquot; global growth was resisted by ministers
Francis Mer of France and Germany's Hans Eichel, who say
the weakening dollar hurts the 12-nation euro zone's economy
and exports. The euro has risen 12 percent against the dollar
since the G-7 last met Sept. 20 in Dubai, while the yen is up
just 8 percent because Japan sells yen to weaken its currency.
quot;We got exactly what we wanted,quot; Italian Finance Minister
Giulio Tremonti said in an interview. quot;We're very satisfied.quot;
The dollar fell to a two-week low against the euro yesterday
on speculation the G-7 wouldn't hatch a plan to stem its drop.
New York trading ended with the dollar at $1.2706 per euro,
1.8 percent lower than it started the week. Against the yen,
the dollar fell for a sixth week in seven, losing 0.23 percent
to 105.49 yen.
The G-7, which also includes Italy, the U.K., and Canada,
accounts for two-thirds of the global economy and its finance
chiefs meet four times a year. Today is the first time it has
singled out excess volatility since it met in Washington on
April 26, 1999. At that meeting, the officials vowed to quot;avoid
excess volatility and significant misalignments of exchange
rates.quot; At the time, the euro bought $1.0590.
While the economy has quot;strengthened significantly,quot; the
recovery remains quot;uneven,quot; the statement said. The G-7's
so-called Agenda for Growth and sound fiscal policies over
the medium term are key to addressing global current
While the G-7 named no countries, its recommendation that
all countries pursue quot;more flexibilityquot; in currencies is a
message to Asian nations such as Japan and China, which
peg or trade their currencies to affect their values and benefit
The world's largest economies also said that resuming the
Doha round of talks on international trade quot;is pivotal.quot;
The G-7 praised itself for pursuing the growth agenda growth
it outlined in Dubai, noting that since September each had
taken certain steps to boost their economy such as Germany
making its labor markets more flexible and Canada
implementing tax cuts.
* * *
G7 Statement Warns on Forex Volatility
5:23p ET Saturday, February 7, 2004
BOCA RATON, Fla. (Reuters) -- Finance ministers and central
bankers from the Group of Seven richest countries said on
Saturday excessive volatility and quot;disorderly movementsquot; in
currency exchange rates were undesirable. A communique
issued at the conclusion of a meeting of G7 financial leaders
-- from Canada, the United States, the U.K., France, Italy,
Japan, and Germany -- also said exchange rates should reflect
quot;We reaffirm that exchange rates should reflect economic
fundamentals. Excess volatility and disorderly movements in
exchange rate markets are undesirable for economic growth,quot;
the communique said.
In a thinly veiled reference to Asian countries that peg their
currencies to the dollar, the statement called for greater
flexibility in exchange rates of nations where flexibility was
quot;We continue to monitor exchange markets closely and
cooperate as appropriate. In this context, we emphasize
that more flexibility in exchange rates is desirable for major
countries or economic areas that lack such flexibility to
promote smooth and widespread adjustments in the
international financial system, based on market
The statement also noted that while the global economic
recovery had gathered pace, that pace was uneven and
countries needed to redouble their efforts to boost growth.
* * *
Compromise reached at G-7 summit on falling dollar
By Martin Crutsinger
Associated Press Economics Writer
5:04p ET Saturday, February 7, 2004
BOCA RATON, Fla. (AP) -- The United States and its
allies resolved sharp differences over how to manage the
falling dollar, agreeing on a compromise that tempered
the flexibility supported by the United States.
The deal came at the end of two days of contentious talks
among the world's wealthiest countries over the best
approach to take to deal with the dollar. It has slumped to
record lows in recent weeks against the euro.
The United States, Japan, Germany, France, Britain,
Canada, and Italy also endorsed efforts to bolster global
growth and support economic reconstruction in Iraq and
On the dollar, the United States had fought to retain an
endorsement of flexibility in exchange rates that the Group
of Seven nations had made at its September meeting.
Currency traders have interpreted that word as indicating
a green light to allow a continued fall in the dollar's value.
The Bush administration supports that development as
offering a way to increase U.S. exports and deal with the
loss of 2.8 million U.S. manufacturing jobs over the past
3 1/2 years.
European countries are alarmed that the dollar's steep
decline could cut sharply into sales by European
companies. They sought language in the final communique
warning against quot;abrupt changesquot; in currency rates.
Officials said that document will offer a compromise,
supporting flexibility while warning against abrupt changes
in currency rates. That allows all sides to claim at least a
quot;The agreement is one that is not just unanimous, but one
people are very happy with,quot; said British Chancellor of the
Exchequer Gordon Brown.
Added German Finance Minister Hans Eichel: quot;It is
important that the exchange rate ... reflect the fundamentals
and that we don't have abrupt changes because that would be
harmful for the growth of all, even if there are short-term
advantages.quot; Eichel was one of those urging warnings against
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