G-7 Discussions Will Focus on Southeast Asia

Finance ministers from the Group of Seven major industrialized nations, meeting in Hong Kong today, will make no “dramatic” departure from their current policy on exchange rates, U.S. Treasury Secretary Robert Rubin said. “It won’t be like Berlin,” Rubin said, referring to the ministers’ meeting in February at which they declared that a two-year effort to strengthen the dollar had ended. Rubin’s comments indicate the G-7 ministers are content with current trading levels for the dollar and will issue a statement to that effect. Given the relative satisfaction with exchange rates, Rubin said, much of the G-7’s discussions will focus on issues outside the ministers’ own countries. High on the agenda will be the economic problems of Southeast Asia, although Rubin said he didn’t know how far the G-7 would go in scolding Thailand and other countries in the region. The U.S. will offer a new proposal that would require countries to include any forward positions on central bank balance sheets because they’re not reserves anymore, but obligations. U.S. officials have been particularly concerned about the forward positions Thailand took in the currency markets in its effort to prop up the baht. The U.S. and G-7 initiatives to tie aid to economic reform in Africa are also on the agenda, Rubin said, as are debt relief for highly indebted poor countries, Russian economic reform and International Monetary Fund/World Bank anti-corruption initiatives.