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GATA will support Ted Butler to liberate the silver market

Section: Daily Dispatches

11:08p ET Saturday, February 7, 2004

Dear Friend of GATA and Gold:

The Reuters story about the G-7 meeting appended here
may be most interesting for quoting a Merrill Lynch
foreign-exchange expert as predicting that the European
Central Bank soon will be undercutting its own currency
just as Asian central banks have been doing, and for
acknowledging that currency manipulation is indeed
the order of the day for quite a few central banks.

Since the central banks do much of it more or less in
the open, even holding public conferences to discuss
it, maybe quot;conspiracyquot; isn't the precise phrase. How
about quot;open conspiracyquot;?

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

G-7 Says Currency Volatility is a Risk to Growth

By Glenn Somerville
Reuters Staff Writer
9:38p ET Saturday, February 7, 2004

a href=;jsessionid=R5VYEARHMOIBCCRBAEht...

BOCA RATON, Fla. -- Finance chiefs from rich nations agreed
on Saturday a global recovery was gaining steam and papered
over tensions on currency exchange rates by warning markets
quot;excess volatilityquot; was not to be tolerated.

As finance ministers and central bankers from the Group of
Seven wrapped up a two-day meeting at a plush Florida resort,
they sought to calm fretful currency markets and to offer a
balm to Europeans worried their rising euro could hurt growth.

quot;Excess volatility and disorderly movements in exchange
rates are undesirable for economic growth,quot; the G7 said in
a closing communique. quot;We continue to monitor exchange
markets closely and cooperate as appropriate.quot;

The statement by the United States, Britain, Canada,
France, Germany, Italy, and Japan was a calculated effort
to counter the impact of their announcement in Dubai last
September urging quot;more flexibilityquot; in currencies -- which
prompted a dollar selloff that took its value down 10 percent
against the euro.

But analysts said while the statement may give pause to
markets in the short term, it will not change a longer term
downward trend for the dollar stemming in part from record
U.S. budget deficits.

quot;I think we are much closer to intervention,quot; said Marcel
Kasumovich, a foreign-exchange strategist with Merrill
Lynch in New York, referring to the possibility that a
continued appreciation in the euro's value could lead
Europe to counter it by selling the currency and buying

U.S. Treasury Secretary John Snow, at a press
conference afterward, made clear that was not
something the free market-oriented Bush administration
wanted to see and repeated a familiar refrain that
competition should reign.

quot;A strong dollar is in our national interest,quot; Snow said.
quot;But the relative values of currencies are best
established in open competitive currency markets.
Nobody can devalue their way to prosperity.quot;

The G7 statement went a step further, saying there
should be quot;more flexibility in exchange rates ... for
major countries or economic areas that lack such
flexibility,quot; in an apparent reference to Asian countries
that peg their currencies to others -- as China links its
yuan to the dollar -- or intervene regularly to affect

Snow turned aside a question on whether China, which
the United States wants to loosen its 8.3 yuan peg to
the dollar, was the intended target. He said only that the
statement was agreed by the full G7 and said quot;it speaks
for itself.quot;

Japan's Finance Minister Sadakazu Tanagaki denied that
Japan, which has spent heavily to keep its yen from rising
in value and sapping its exports, was one of the countries
that lacked flexibility in currency issues.

quot;That's not the case,quot; he said after the G7 meeting,
indicating that Tokyo would keep up its market forays
when the yen got out of line with fundamentals, a resolve
that could be tested as early as next week.

In fact, the United States felt getting more specific
references to the need for flexibility into the communique
was worth giving Europe a concession by inveighing
against volatility. Nor did the resulting compromise lessen
pressure on China -- by some measures now the world's
second largest economy -- to speed up currency reform.

China is not the only country that manipulates its currency.
South Korea and Taiwan, among others, are regularly
criticized for doing so. Some G7 participants made lightly
veiled references to the Asian countries.

quot;The various currencies that are not flexible will recognize
themselves,quot; European Central Bank President Jean-Claude
Trichet said. quot;There is not only one, there are quite a few.quot;

European officials arrived at the meeting, held in a luxurious
resort on Florida's wealthy quot;Gold Coastquot; near Miami,
determined to have the Dubai wording altered to clarify that
it was not intended to sanction a soaring euro that could
imperil their export-led recovery.

The U.S. view after the meeting was that Europe had been
wrong in feeling the Dubai statement sanctioned a dollar
selloff but that it was worth accommodating them as long
as the importance of flexible currencies was preserved.

The G7 participants, while allowing that a global economic
recovery was quickening, warned the pace was uneven and
said countries needed to redouble their efforts to boost growth.

The officials also wagged a finger at Argentina, urging it in
the statement to quot;engage constructivelyquot; with creditors and
live up to its pledges to multilateral lenders.

A number of G7 officials have expressed frustration at
Argentina's slow progress in talks with private bondholders
aimed at restructuring $88 billion in defaulted debt.

Buenos Aires has held fast to its offer, made in Dubai last
year, of 25 cents on every dollar of nominal debt.


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