Euro zone finance ministers – unable to agree on how to respond to the euro’s strength against the dollar – decided instead to focus on China. At the Ecofin gathering in Luxembourg, they called on Beijing to adjust the exchange rate of its currency.
The meeting’s Chairman Jean Claude Juncker said: “In emerging economies, with large and growing current account surpluses, especially China, it is desirable that their effective exchange rates move so that necessary adjustments will occur.” He added: “We have assembled in the following order: first point China, second point dollar, third point yen.”
Since January, the euro has risen in value by 11%again the Japanese yen, by 9% against the US dollar – hitting a record of almost one dollar 43 cents last week – and it has appreciated 6% in comparison with the Chinese yuan.
In response to pressure from Washington, the authorities in Beijing have allowed the Chinese currency to rise marginally against the dollar while it has fallen against the euro. That has the Europeans protesting that they being unfairly punished for currency mismatches. Europe’s trade deficit with China reached a record in the first half of this year.
In Beijing, a Foreign Ministry spokesman said China will continue to adopt a reform oriented policy on its exchange-rate mechanism, but added: “These adjustments have to be done gradually and in line with the market.”