Japan is working closely with the US, its most important ally, to tackle soaring oil and food prices, the main topics of an international meeting starting yesterday, Japan's finance minister said.
“We need to coordinate our actions closely because of the many risk factors,” Japanese Finance Minister Fukushiro Nukaga told reporters after meeting US Treasury Secretary Henry Paulson in Osaka.
The officials are in Osaka for a two-day meeting of finance ministers from the G8 industrialized nations.
Nukaga declined to comment on the specifics of his conversation with Paulson about currencies but acknowledged the topic came up.
“I decline to comment as I usually don’t comment on foreign exchange matters,” he said at an Osaka hall, adding that it was unclear whether currency matters will be on the official agenda at the G8 meeting.
Weakness in the dollar has been a concern lately. It has contributed to the surge in oil prices because some traders invest in oil as a hedge against inflation and a slumping greenback.
The dollar has recovered against the yen and euro after Paulson warned earlier this week that he isn’t ruling out intervening in the currency market to stabilized the currency.
US Federal Reserve Chairman Ben Bernanke also helped lift the dollar by suggesting the Fed is prepared to raise interest rates to fight inflation.
Nukaga said work was going “smoothly” on an initiative for Climate Investment Funds being administered by the World Bank to provide money for developing nations to battle global warming.
Nukaga also expressed worries about the US economy, gripped by a credit crunch triggered by surge in defaults on risky mortgages.
That’s led to multibillion-dollar losses at financial companies and global market turmoil.
“We must remain vigilant on this still,” he said.
The G8 session — bringing together finance ministers from the US, Japan, Russia, Germany, France, Britain, Italy and Canada — is one of several ministerial meetings leading up to the July 7 to July 9 leaders’ summit on the northern island of Hokkaido.
The finance ministers were to have dinner with their counterparts and other officials from Australia, Brazil, China, South Korea, South Africa and Thailand to weigh the impact of surging oil and food prices on the global economy, the Ministry of Finance said.
Oil spiked to nearly US$140 a barrel last week, and several Asian countries, including India, Indonesia and Malaysia, have cut fuel subsidies, raising retail prices for millions of consumers.
French Finance Minister Christine Lagarde, a G8 participant, urged nations to work together to provide more information about oil reserves to calm upward pressures on oil prices.
“We need more information,” Lagarde said on the sidelines of the G8 gathering. “We shouldn’t rush into the adoption of measures without having tested them first.”
Meanwhile, the IMF said yesterday a slowdown in the global economy over the next few quarters should tame oil prices.
“The slowdown in growth will influence oil prices” on the downside, IMF Managing Director Dominique Strauss-Kahn said in Osaka.
The G8 ministers are expected to push the IMF to study anew how much speculative money is behind soaring oil prices. At a February gathering of finance ministers from the G7 — which excludes Russia — the IMF was asked to check on such speculative flows.
Strauss-Kahn also praised the Federal Reserve and European Central Bank for the way they have handled market turmoil so far, while defending central banks’ focus on inflation.
“Up to now in the subprime crisis, the Fed and the ECB have played their role well ... managing the crisis in the way we would have hoped,” he said.
“Inflation is a serious problem. It’s legitimate that central banks focus all their attention on it,” he said.
In April, the IMF projected global economic growth would slow to 3.7 percent this year from 4.9 percent last year.
The Washington-based institution predicts that the US economy, the world’s largest, will expand just 0.5 percent this year.
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