Dollar trades in tight range during G-20 meetings

AP News
Posted: Oct 22, 2010 3:57 PM
Dollar trades in tight range during G-20 meetings

The dollar edged higher against other major currencies as the U.S. Treasury Secretary urged finance officials from the Group of 20 to try to even out big trade imbalances in major economies.

Global tensions over exchange rates have risen recently as several countries try to weaken their currencies to gain a trade advantage over competitors.

The euro, used by 16 European countries, dipped to $1.3931 in New York late Friday from $1.3933 late Thursday. The British pound fell to $1.5669 from $1.5713, while the dollar edged up to 81.36 Japanese yen from 81.27 yen late Thursday.

The dollar has slid steeply over the past two months because investors expect that the Federal Reserve will soon announce a plan to pump more money into the U.S. economy, but several analysts think it may be near a bottom. Investors expect that the Fed will begin buying bonds to drive interest rates lower in an effort to trigger more borrowing and spending and bolster the economy. The lower rates would also weigh on the dollar.

Several other countries have responded to the dollar's plunge by moving to weaken their own currencies. Critics also say China, the world's No. 2 economy, is keeping the yuan too low. There are fears that a possible "currency war," when various countries devalue their currencies, could lead to trade barriers and hamper the global economic recovery.

According to officials at the summit, Treasury Secretary Timothy Geithner proposed in a letter that countries with big trade surpluses set targets to trim them, although that met with pushback from officials from other countries. He called for big exporters to allow their currencies to rise in concert. Analysts said he also urged countries not to try to weaken their currencies to gain trade advantages.

But those proposals may be difficult to put into effect, said Credit Suisse foreign exchange analysts in a research note.

In other late trading in New York, the dollar ticked up to 1.0273 Canadian dollars from 1.0271 Canadian dollars, and rose to 0.9783 Swiss francs from 0.9665 Swiss francs.