Friday, November 5, 2010

Currency Wars: Germany Upset w/ US Stimulus Plan

Berlin - German Finance Minister Wolfgang Schaeuble sharply criticized on Friday the US central bank's new monetary stimulus plan aimed at shoring up the recovery in the world's biggest economy.

"With all respect, my impression is that the US is in the dark," Schaeuble said after the US Federal Reserve launched on Wednesday moves to pump 600 billion dollars to help lower interest rates and bolster economic growth.

His comments following criticism of the Washington-based monetary authorities' plan from around the world.

The Fed's capital-injection push also threatens to exacerbate the current conflict over world currency rates ahead of next week's summit of the Group of 20 (G20) leading industrialized and emerging economies in Seoul.

Schaeble described the US central bank's decision as incomprehensible, saying that the current problems facing the US had nothing to do with a shortage of liquidity.

"Saying now that we once again make an additional 600 billion dollars available will not solve the problem," the German finance minister said in Berlin.

One result of the Fed's new monetary stimulus measures was to help push up the euro against the dollar.

The euro was trading at more than 1.41 dollars Friday after breaching the 1.42-dollar mark on Thursday.

The common currency has gained about 20 per cent against the greenback since the start of June, consequently raising concerns about the outlook for exports from the 16-member eurozone.

In his remarks, Schaeuble also criticized Washington's current currency market policy. A conflict between the US and China over the value of the yuan lies at the heart of what has been dubbed a currency war.

Schaeuble said Europe would help to defuse the current currency dispute between China and the US.

He said there was an impression that the US acted as similar as it claimed China did.

The US has claimed for years that China maintained its currency at artificially low levels in order to boost its export advantage.
Posted by Earth Times Staff

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