Financial Post G7 Record

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Financial Post, Weekly edition, Tue 25 Apr 95, page 51

Keywords: Foreign exchange United States

US$ gains ahead of G-7 meeting


The US$ gained strength yesterday, as dealers reckoned the Group of Seven industrialized nations might try to cobble together a rough plan of support for the beleaguered currency.

Although many say the chances of a credible package are slim, traders hedged their bets and bought the currency.

The meeting of the G-7 - Britain, Canada, France, Germany, Italy, Japan and the U.S. - kicks off today in Washington and officials said yesterday that the sharply lower US$ would be at the top of the agenda.

''I don't think people are taking big positions ahead of the G-7, even though the suspicions are that nothing concrete US$-supportive will come out,'' said Win Thin, senior international economist at the consulting firm I.D.E.A.

In late New York trading, the US$ was at 1.3760 marks, up from 1.3703 marks late Friday. The US$ was also up to 83.10 yen, from 82.73 yen on Friday.

Prospects for a G-7 accord seemed dim because of recent divergence between the industrial powers.

Germany has flatly questioned U.S. economic policy and the International Monetary Fund weighed in yesterday, calling on the U.S. to do more for the US$.

Tokyo has also been worried that the 20% rise in the value of the yen this year against the US$ could hurt exporters and throw Japan into a recession.

''The rift is there between the Europeans and Japanese and what they perceive as the U.S. lack of support for the US$,'' said Steven Walker, dealer at Skandibank.

On a visit to New York, British Chancellor of the Exchequer Kenneth Clarke said he saw little chance of the G-7 coming out with a unified plan to affect the markets, but expected the formation of a common view.

Analysts said the fate of the US$, which has recently steadied after falling to post-war lows against the mark and yen, would be linked to the outcome of the meeting, and whether the finance ministers convince the markets of their resolve to see a stronger greenback.

The US$ was at 1.1405 Swiss francs, compared with 1.1325 Swiss francs, while the British pound traded at US$1.6045, up from US$1.6115 late Friday.

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Revised: June 3, 1995

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