Saturday, April 12, 2008

G7 to Defend Dollar?

by Bill McBride on 4/12/2008 01:57:00 AM

From the WSJ: G-7 Sets Aggressive Tone On the Sagging Dollar

The world's major economic powers issued a warning to financial markets Friday that they won't sit by and watch the dollar continue to slide against other big currencies.

In a highly unusual move, Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and their counterparts from the Group of Seven nations said in a statement: "Since our last meeting, there have been at times sharp fluctuations in major currencies, and we are concerned about their possible implications for economic and financial stability."
Earlier this week, when asked about the possibility of a dollar crisis, Volcker responded "You don't have to predict it, you're in it." With these highly unusual comments, the G-7 clearly agrees with Volcker.

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