Plans to restructure the global economy faced a reality check today when the head of the European Central Bank flatly rejected the idea that the euro should rise against the dollar to cut trade imbalances.
The need to reduce huge trade gaps between nations has been a major topic in talks between global finance chiefs on how to prevent another economic crisis. Many economists think the dollar may have to fall to help shrink the US trade deficit.
But ECB President Jean-Claude Trichet stressed the euro should not have to bear part of that adjustment, underlining the difficulties that the world will face in achieving any rebalancing.
The euro has risen about 14% against the dollar since March and, at around $1.46, is not far from its record high of $1.6038, hit in July 2008.
Trichet and some other European officials, especially the French, have expressed concern that excessive strength of the euro could hurt the region's exports, even though the euro zone's trade surplus ballooned to €12.6 billion in July.
Currencies of emerging market nations should bear much of the brunt of any realignment, Trichet said.
Trichet did not name the emerging market nations, but developed countries urged China once more at the weekend to let its yuan appreciate. China, which has a massive trade surplus, showed no sign of complying.
Asked about pressure from other countries for appreciation of the yuan, Yi Gang, a Chinese central bank vice governor, said China would continue its current policy, which focuses on keeping the currency stable against the dollar.
