BERLIN (MNI) – Foreign exchange rate topics will be discussed at
the G20 summit next week in Seoul, senior German government officials
said Friday, announcing at the same time that Germany will repeat its
criticism of US monetary policy at the summit.

“Yes, there will be a discussion of foreign exchange rates at the
G20 summit,” a German finance ministry source explained.

German Chancellor Angela Merkel will also address the effect that
the Federal Reserve’s loose monetary policy has on the dollar, the
government source explained.

Earlier today, Finance Minister Wolfgang Schaeuble attacked the Fed
for its new round of quantitative easing (QE2), arguing it has the same
effect on the dollar as the Chinese government’s currency policy has on
the yuan.

And Schaeuble will repeat his criticism of US monetary policies at
the G20 summit, the finance ministry official reiterated.

“At the moment, from a European viewpoint, one could get the
impression that the U.S. is doing through other means what it is
reproaching China for,” Schaeuble said at a conference in Berlin.

“One could get the idea that the instruments are different but the
goal is the same, and the one who suffers are clearly…to a certain
degree the Europeans,” the minister argued.

While the euro gained versus the dollar after the QE2 announcement
Wednesday, the single currency has given back some gains due to
reemerging concerns about the Eurozone’s periphery. The greenback was
boosted Friday afternoon by stronger-than-expected US October non-farm
payroll data.

The German government source warned that “the danger of
protectionist tendencies has increased and not decreased,” pointing also
to protectionism via manipulation of foreign exchange rates. “Exchange
rates have to be on the [negotiating] table” at the G20 summit, he said.

The finance ministry source also pointed to other “significant
risks” to the global economy such as the still “fragile state” of
financial markets and rising unemployment in some parts of the world.

Turning to financial market regulation, the ministry official said
he expected that the Basel III banking regulation framework will be
adopted at the G20 summit without any changes.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

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