Help With U.S. Dollar Sag, Flaherty Tells China

“A third of the burden has been borne by Canada, and we're only 33 million people in Canada. About a third by Europe,” Mr. Flaherty said after meeting with his counterparts at the bi-annual Group of Seven meeting. In the past, the Bank of Canada has studiously avoided talk of burden-sharing of currency movements, since it has argued that much of the Canadian dollar's appreciation since 2002 has been warranted by higher commodity prices and strong economic fundamentals. But Friday, Canada appeared to join Europe in claiming that the appreciation of their currencies was unfair. The euro also traded at an all-time high against the U.S. dollar Friday. The G7 resisted calls from Europe to bolster the U.S. dollar, and instead wagged their fingers harder than ever at China's exchange-rate regime. They used their toughest language to date in their campaign to persuade China to allow its currency to appreciate. But the G7 communiqué did not mention the U.S. dollar, the euro or the yuan at all. Markets sent the U.S. dollar lower, interpreting the G7 statement to mean that the only currency solution the seven countries could agree on was that China needs to be more flexible. China was not included in the meeting. http://www.theglobeandmail.com/servlet/story/RTGAM.20071020.G720/BNStory/International/home

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