Luxembourg (AsiaNews/Agencies) – The 13 finance ministers from Europe’s common currency area turned up the heat on China on Monday over the weakness of its state-controlled currency, seen by them as an unfair trade advantage. They made the point in talks in Luxembourg in preparation for the October 19 meeting of finance ministers from the G7 industrialised powers (United States, Japan, Canada, United Kingdom, Germany, France and Italy.”
The euro has risen more than 20 per cent against the dollar and 25 per cent against yen. The same has happened to the yuan in the last two years.
Though China has allowed its currency to gain marginally against the dollar over the past two years, it has let it slide against the euro in equal proportion, compounding the feeling that the euro zone is carrying the can for currency mismatches.
Whilst a rising euro can help limit the cost of oil, which is priced in dollars, and so curb inflation, it makes it harder for exporters to compete in world markets where the Chinese yuan sets a benchmark that many others in Asia follow.
The United States and the European Union are also divided over the issue. France and Italy deplore the euro’s strength, whilst German Finance Minister Peer Steinbrueck stated his preference for a ‘strong euro.’ Hence it will be hard for Europeans to come up with a common position for the G7 summit.
Both the United States and Japan have accused Beijing of keeping the value of the yuan artificially low and are demanding that it reflect its real market value
But some analysts believe that Washington is no more willing now than previously to lend Europe a hand to help its exports.
Rodrigo Rato, head of the International Monetary Fund, said that the US dollar was undervalued and urged greater flexibility from Beijing on its currency.