Euro zone officials fret over dollar’s fall

The euro zone is mounting a fresh bid to halt the dollar’s slide against the euro as a meeting of the Group of 7 economic powers approaches, but the United States kept silent on the issue on Tuesday and Britain distanced itself.

In advance of the G7 meeting, scheduled for Oct. 19, finance ministers from the 13 euro zone countries were seeking a gesture of support from U.S. Treasury Secretary Henry M. Paulson Jr., a key player who has so far refused to sing from their songbook.

In the last year, the euro has risen about 10% against both the dollar and yen, and fresh highs over recent weeks have compounded fears that exporters from the region will suffer.

The euro ended Tuesday at $1.415 in New York. It has pulled back slightly from a record high of $1.427 on Friday.

Euro zone officials said that plans were afoot to press for a more combative stance on the matter when finance ministers from the bloc meet in Luxembourg on Monday to prepare for the G7 talks in Washington.

French Finance Minister Christine Lagarde made it clear in a newspaper interview published Tuesday that Paris was intent on pushing hard and would meet in the coming days with other Europeans on a joint initiative to rein in the euro.

“I’d really like to hear again Henry Paulson saying loud and clear that a strong dollar is good for the American economy,” she told business daily Les Echos.

Britain distanced itself from its European neighbors Tuesday.

“There have been no such discussions with Britain ahead of the G7, nor is this an issue for EU coordination,” a government source told Reuters.

Italian European Affairs Minister Emma Bonino said she foresaw the euro soon hitting $1.50 and hoped EU leaders would address the matter at a summit in Lisbon just before the G7 meeting.

The G7 includes Britain and three euro currency countries -- France, Germany and Italy -- as well as the U.S., Canada and Japan.

European exporters have been complaining loudly about the robust euro, which makes their goods more expensive in the U.S. and can give American companies a price advantage abroad.

Mercedes Chief Operating Officer Rainer Schmueckle said the automaker would have to think about shifting more of its production to the United States if the euro’s rise continued and it stayed above $1.45.

In a broader sign of damage done to the euro zone economy, a survey of corporate purchasing managers showed manufacturing growth at its weakest pace in nearly two years in September.

Jean-Claude Juncker, chairman of the Eurogroup forum where finance ministers discuss strategic issues with European Central Bank President Jean-Claude Trichet, said it was unfair for Europe to suffer alone the costs of global imbalances.

“Europe cannot be the area of the world’s economy that will bear the consequences of others’ inaction,” said Juncker, who a few days earlier called for U.S. action to cut its trade deficit and give meaning to its mantra that a strong dollar is in its interests.

On Monday, Trichet said he noted that the U.S. had said in the past it was committed to a strong dollar.

But this year, Paulson gave short shrift to Europe’s attempt to use a G7 communique in more forceful fashion to influence currency markets.

The communique issued at a G7 meeting in Germany in February and repeated in April said, “We reaffirm that exchange rates should reflect economic fundamentals. Excess volatility and disorderly movements in exchange rates are undesirable for economic growth.”