By Andrew Torchia – Analysis
LONDON (Reuters) – The U.S. dollar may come under renewed pressure
from emerging market currencies and the euro after a meeting of the world’s top
finance officials failed to take concrete action on rebalancing global money flows.
Finance ministers and central bank governors of the Group of 20 major countries,
meeting in Scotland at the weekend, launched a “framework” in which they will
discuss how to reduce trade and savings imbalances between nations.
But their communique talked only in general terms about rebalancing economies,
and implied they might not agree on specific policies for individual countries to
adopt before the end of next year at the earliest.
The result may be a continuation of heavy fund flows into emerging markets,
boosting currencies there. And central banks intervening to slow currency
appreciation may keep investing much of the money they obtain in the euro,
pushing up that currency too.
“We’re probably looking at fresh dollar weakness in the short term” in the
wake of the G20 meeting, said Kenneth Broux, senior markets economist at Lloyds TSB.
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