European leaders tackle weak dollar

Marketplace Staff Oct 19, 2007


Megan Williams: The price of oil is holding at nearly $90 a barrel this morning. It passed that mark last night. It’s never been here before. Oil prices have hit record highs in each of the last five days.

Meanwhile, the dollar continues to weaken. It fell to an all-time low against the euro this morning. That will be topic number one at the G7 meeting this weekend in Washington. Megan Williams reports from Rome on what European leaders are thinking.

Megan Williams: After hitting a high of $1.43, European finance leaders heading to Washington are more worried than ever that the weak dollar with curb E.U. growth. France and Italy in particular are suffering from their exports now being too expensive, and imports getting cheaper.

E.U. expert Francis X. Rocca says Europeans aren’t just worried about the dollar, though:

Francis X. Rocca: But I think the real concern, which they share with the United States, is China, which pegs its currency, the yuan, to the U.S. dollar. The Europeans don’t have any desire to boost China’s trade surplus with Europe any further.

A strong euro makes Chinese goods cheaper for European consumers.

Over the weekend, leaders will meet with the International Monetary Fund to discuss trying to push China to let its yuan currency rise in value faster. That could help shrink the country’s huge trade surplus, and relax the pressure on the euro.

In Rome, I’m Megan Williams for Marketplace.

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