BERLIN (MNI) – The German government suggested on Friday that the
dollar might be undervalued due to the massive liquidity injections of
the US Federal Reserve.
Speaking at a regular press conference here, government spokesman
Steffen Seibert reminded that Chancellor Angela Merkel had recently said
the foreign exchange rate of the Chinese yuan should reflect its real
value.
“One could naturally also argue that the US currency — given that
extremely much liquidity is pumped into the market there — tends to
devalue and [the forex rate] may not reflect [the dollar's] real value,”
the government spokesman reckoned.
The time has come for an exit from stimulus programs, Seibert
stressed. “This exit strategy has been agreed upon by the G-20 in
Toronto and one should adhere to that strategy,” the spokesman
explained. “One should not underestimate the risks from unsustainable
fiscal policy.”
The dollar has been on a downward spiral since August 27, the day
Federal Reserve Chairman Chair Ben Bernanke said that the Fed was
prepared to resort to more “unconventional” monetary stimulus, including
additional purchases of long-term securities, to avoid a “significant”
further weakening of the economy or further disinflation.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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