BERLIN, Nov 19 (AFP) - The top two US finance officials dashed European hopes for quick relief from a weak dollar Friday hours ahead of a meeting here of finance chiefs from 20 of the world's most powerful nations.
US Treasury Secretary John Snow bluntly declared that the Group of 20 gathering of finance ministers and central bankers was not the place to talk about exchange rates and insisted that the main issue was how to galvanize economic growth.
Federal Reserve Chairman Alan Greenspan for his part asserted that central bank intervention had but a modest impact on exchange markets and said he saw no need for stepped up central bank coordination.
Organizers of the G20 meeting said the current strength of the euro and the slide of the dollar -- which have rattled European leaders anxious to preserve a fragile recovey -- are not on the official agenda here this weekend.
But analysts said volatility on exchange markets was likely to dominate talks on the sidelines.
Several European leaders have stepped up calls for action to support the sagging dollar, which has fallen to record lows this week.
But Snow's comments Friday clearly signaled that Washington had no interest in such a move.
Instead, he said, the focus should be economic growth at the G20 talks, which include representatives from the Group of Seven industrialized nations and big developing countries such as China, India and Brazil.
"The G20 is not a forum for discussion of exchange rates, so that's not an issue that's on the agenda," Snow told reporters before boarding a flight from Warsaw to the German capital.
"The issues that seem to me of particular importance for this G20 are development of a policy for sustainable growth," he said. "The US is much in the forefront of advancing the idea that growth is very much in the interest of the global community."
A German official who asked not to be identified said there had been a G20 consensus to exclude foreign exchange rates from the agenda.
"This is not the forum to discuss it," she added, saying however that "as part of the discussion on global balances and deficits obviously the exchange rates will play a role but it's not the focus."
Snow has also signaled that Washington opposes intervention to slow the fall of the dollar, which boosts US exports. But a corresponding appreciation of the euro makes exports from the 12-nation eurozone more expensive and therefore less compestitive.
Snow said he would continue to emphasize efforts to step up economic activity in some of the slow-growing economies.
Dealers and many analysts blame the dollar's decline on global concern about the huge budget and current account deficits in the United States, which make the dollar less attractive and therefore weaker.
Snow has acknowledged that Washington needs to reduce the shortfalls but nonetheless maintains that market forces rather than intervention should set the value of currencies.
Greenspan, addressing a banking conference in Frankfurt, likewise reiterated his reluctance to take part in interventions aimed at affecting currency rates.
"Large interventions ... do not create very large increases in exchange rates of a protracted nature," Greenspan said.
The euro hit an all-time high of 1.3074 dollars Thursday, as German Finance Minister Hans Eichel called for the United States, Europe and Japan to take a common position against the "brutal" rise in the European single currency.
But Greenspan, asked whether there should be better coordination between the United States, the European Union and Japan on the matter, replied: "I don't think we have to do more. We're already doing as much as necessary."
Shortly before the meeting opened, a German government official expressed hope that China's recent hike in interest rates suggested a greater flexibility in the forex regime of its dollar-pegged currency, the yuan.
The move "could also indicate that the role of the (Chinese) central bank is being called on to evolve" on forex policy, she said.
The G20 delegations begin closed-door discussions Saturday -- following a dinner on Friday night -- that are to wind up at midday Sunday.
11/19/2004 19:40 GMT - AFP