The US will be pressured by the Europeans and Japanese at the upcoming G7 meeting to get its "twin deficits" under control as part of an effort to stabilize the flagging dollar, analysts say.
The two-day G7 finance ministers meeting opening tomorrow in Boca Raton, Florida, will give leaders a chance to take stock of the global economic situation.
Economists say the Europeans, and to a lesser degree the Japanese, are concerned that their strengthening currencies will dent exports and cut into their fragile economic recoveries, and want a G7 statement to help reverse the dollar's slide.
"Clearly, the dollar is the hot-button issue. Both the Europeans and the Japanese have expressed concerns about the dollar depreciating too rapidly," said Sung Won Sohn, chief economist Wells Fargo Bank.
But Sohn said he thinks these complaints "will fall on deaf ears" in Washington, which despite its "strong dollar" rhetoric is pleased with the lower value of the dollar, which makes US exports more competitive.
"My assumption is that Washington is not all that unhappy with the gradual depreciation of the dollar," he said. "It's good for the US economy, and that's what's called for by economic fundamentals."
These fundamentals, he said, include the "twin deficits" in the federal budget and the current account, a measure of trade and investment.
Jay Bryson, global economist at Wachovia Securities, said he believes the G7 will try to come up with a communique that placates the Japanese and Europeans.
"Many people see a repeat of the message of Dubai, with some adjustments on the margins," Bryson said.
Bryson said one of the key phrases to look for includes a mention of "flexible exchange rates," which seemed to be a signal to Asian nations to refrain from intervention and allow their currencies to rise.
"I don't think they're going to name China or [South] Korea or Singapore, but everybody knows what they're talking about," he said.
But he said Japan and Europe may press for a mention of "excess volatility" that could be a signal to avoid further sharp falls in the dollar.
Bryson said it could be difficult to craft a message to help keep the dollar firm against the European currencies while allowing it to weaken against Asian currencies.
One phrase to look for, he said, would be that the adjustment "needs to be more broadly shared," Bryson said, an implication that Asian nations need to let their currencies appreciate to help correct big global trade imbalances.
The US, still the world's economic powerhouse, is likely to reproach its partners for their sluggish economies, saying the problems will be cured by growth instead of intervention.
SEPARATE: The MAC rebutted Beijing’s claim that Taiwan is China’s province, asserting that UN Resolution 2758 neither mentions Taiwan nor grants the PRC authority over it The “status quo” of democratic Taiwan and autocratic China not belonging to each other has long been recognized by the international community, the Mainland Affairs Council (MAC) said yesterday in its rebuttal of Beijing’s claim that Taiwan can only be represented in the UN as “Taiwan, Province of China.” Chinese Minister of Foreign Affairs Wang Yi (王毅) yesterday at a news conference of the third session at the 14th National People’s Congress said that Taiwan can only be referred to as “Taiwan, Province of China” at the UN. Taiwan is an inseparable part of Chinese territory, which is not only history but
CROSSED A LINE: While entertainers working in China have made pro-China statements before, this time it seriously affected the nation’s security and interests, a source said The Mainland Affairs Council (MAC) late on Saturday night condemned the comments of Taiwanese entertainers who reposted Chinese statements denigrating Taiwan’s sovereignty. The nation’s cross-strait affairs authority issued the statement after several Taiwanese entertainers, including Patty Hou (侯佩岑), Ouyang Nana (歐陽娜娜) and Michelle Chen (陳妍希), on Friday and Saturday shared on their respective Sina Weibo (微博) accounts a post by state broadcaster China Central Television. The post showed an image of a map of Taiwan along with the five stars of the Chinese flag, and the message: “Taiwan is never a country. It never was and never will be.” The post followed remarks
INVESTMENT WATCH: The US activity would not affect the firm’s investment in Taiwan, where 11 production lines would likely be completed this year, C.C. Wei said Investments by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) in the US should not be a cause for concern, but rather seen as the moment that the company and Taiwan stepped into the global spotlight, President William Lai (賴清德) told a news conference at the Presidential Office in Taipei yesterday alongside TSMC chairman and chief executive officer C.C. Wei (魏哲家). Wei and US President Donald Trump in Washington on Monday announced plans to invest US$100 billion in the US to build three advanced foundries, two packaging plants, and a research and development center, after Trump threatened to slap tariffs on chips made
Proposed amendments would forbid the use of all personal electronic devices during school hours in high schools and below, starting from the next school year in August, the Ministry of Education said on Monday. The Regulations on the Use of Mobile Devices at Educational Facilities up to High Schools (高級中等以下學校校園行動載具使用原則) state that mobile devices — defined as mobile phones, laptops, tablets, smartwatches or other wearables — should be turned off at school. The changes would stipulate that use of such devices during class is forbidden, and the devices should be handed to a teacher or the school for safekeeping. The amendments also say
RSS