Sarkozy to urge "fair" forex on China visit


  • World
  • Thursday, 22 Nov 2007

By Tim Hepher

PARIS (Reuters) - French President Nicolas Sarkozy will use a visit to China this weekend to call for an "equitable and fair" relationship between four major currencies -- the dollar, euro, yen and yuan -- a senior French official said on Thursday. 

Sarkozy's public comments on the visit are likely to be low-key, coming shortly before a planned visit to China by top European monetary officials. But the French leader is expected to deliver a firm message on currencies in private, the official, who declined to be identified, said. 

France's President Nicolas Sarkozy attends the annual meeting of the French mayors in Paris, November 20, 2007. Sarkozy will use a visit to China this weekend to call for an "equitable and fair" relationship between four major currencies -- the dollar, euro, yen and yuan -- a senior French official said on Thursday. (REUTERS/Charles Platiau)

"He will say very frankly that there should be a more equitable and fair relationship between these four currencies. France is no longer alone on this, all the Europeans think the same and are starting to say so," he said. 

"He will have basically the same message as (European Central Bank President Jean-Claude) Trichet but perhaps in slightly different words," he said. 

Jean-Claude Juncker, chairman of the Eurogroup of finance ministers of the 13 states using the euro, will lead an unprecedented euro zone delegation to China next week, with ECB President Trichet and EU Monetary Affairs Commissioner Joaquin Almunia, to urge Beijing to revalue its currency. 

"We will be explaining why the Chinese economic leaders should perhaps change tack. We will make sure we are very explicit this time round," Juncker said on Tuesday. Last week Juncker said the Chinese yuan was undervalued by between 20 and 25 percent. 

China's major trading partners, including the United States, have argued for a stronger yuan, saying Chinese exports enjoy an unfair advantage on global markets and fuel global economic imbalances. 

China revalued the yuan by 2.1 percent in July 2005, when it also unleashed it from its dollar peg to float within managed bands. China in May widened the daily band for the yuan against the dollar to plus or minus 0.5 percent from 0.3 percent. 

SARKOZY TO MEET TRICHET 

Sarkozy's spokesman, David Martinon, said at a separate news conference that the French president would meet Trichet on Thursday and discuss economic and financial issues. 

"The president finds it important to be able to discuss developments with Mr Trichet before his visit to China, where these issues will be discussed. All the more so because Mr Trichet will go to Beijing himself after the president to meet the Chinese authorities," Martinon said. 

The comments from the official came as the euro hovered near a record high of more than $1.48 and they echo growing concern among European policy makers about its seemingly unstoppable rise. 

European Commission President Jose Manuel Barroso said in Singapore that the strength of the euro was becoming a problem for European exporters and Trade Commissioner Peter Mandelson said Beijing had to take firm action. 

"During the six days that I will be spending in China, our trade deficit is going to grow by an addition of 2 billion euros. That is unacceptable, it is unsustainable," Mandelson told reporters at the sidelines of an EU-ASEAN summit in Singapore. 

"I don't think Europe's sincerity in dialogue and cooperation...is sufficiently reciprocated by that of the Chinese authorities," he said. 

"There is going to be some hard talking when we are in Beijing, but I hope that some firm actions, some remedies, will follow our hard talking." 

Sarkozy has been unremitting in his calls for policy makers to take stronger steps to prevent the soaring euro rising further and unbalancing world currencies. 

On a visit to Washington earlier this month, he warned of the risk that disarray in currency markets could lead to "economic war". 


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