The finance ministers from the Group of Eight nations confirmed their position in the favor of a stronger U.S. dollar at the meeting in Osaka, Japan today.
The U.S. Treasury Secretary Henry Paulson said that the strong dollar «is in our nations interest» after the meeting today. French Minister of Finance Christine Lagarde told reporters that shes happy to know that the U.S. financial authorities are pro strong dollar policy.
G8 identified the rising inflation as their main concern. Both Lagarde and the Russian Financial Minister Alexei Kudrin agreed that the dollars appreciation could contribute to taming the inflation worldwide. Majority of the commodities are priced in the U.S. dollars and if greenback falls their cost grows too, accelerating the consumer prices globally.
Kudrin also named the weaker dollar one of the major reasons for the current oil spike, mentioning that the stronger dollar and a lower oil price would certainly cool inflation down. Paulson argued that since 2002 dollar declined by about 30 percent, while oil surged up by more than 500 percent.
This week had a very successful result for the U.S. currency, which gained 2.6 percent against the euro (the fastest drop for EUR/USD since march 2005). Although the growth of dollar has been strong recently, its still down 5 percent since the start of 2008.
Although U. S. financial officials were reluctant to make any serious statements about their position on the strong dollar for a long time, on June 2 Ben Bernanke said that the central bank will pay a closer attention to the dollars rate on Forex and on the next day Paulson said that he favors a stronger dollar.
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