Currencies on G7 agenda

The Group of Seven industrial nations is likely to continue supporting orderly foreign exchange markets and flexible currencies when finance ministers and central bankers meet in London next week, says United States Treasury Secretary John Snow.

In Boca Raton, Florida, the G7 last year said it discouraged excess volatility, disorderly market moves and inflexible currency policies, such as those practised by China.

Asked if he expected that view to change at the London talks, Snow said: "I wouldn't anticipate that at all."

Germany and France's finance ministers said the dollar's decline of the past year had unfairly punished European economies.

They called for co-ordinated action within the G7 to stem the US currency's decline and urged President George W. Bush's Administration to cut its budget and trade deficits.

Snow said the US was doing its part by trying to halve the federal budget deficit, which reached a record US$412 billion ($578.5 billion) last year.

"We certainly acknowledge the need to address our deficits," Snow said.

"The President says he'll cut the deficit in half in five years. We know that deficits matter. We are intently focused on the subject."

But in a CNBC interview, Snow said the US could not remain "the only engine of growth in the world" and urged Europe and Japan to pursue policies that bolstered growth and China to change its decade-long policy of pegging its currency to the dollar.

The US current account deficit widened to a record US$164.7 billion in the July to September quarter.

- BLOOMBERG