Global Biz

Germany accuses US of indirectly manipulating dollar

(Agencies)
Updated: 2010-10-25 10:27

GYEONGJU, South Korea - German Economy Minister Rainer Bruederle on Saturday took issue with what he called a US policy of increasing liquidity, saying it indirectly manipulated exchange rates.

The US Federal Reserve is widely expected to embark on a fresh round of asset purchases to prop up the economy.

"There was criticism of the American policy of monetary easing, or creating more liquidity," Bruederle said after a meeting in South Korea of finance officials from the Group of 20 economic powers.

"I tried to make clear in my contribution to the discussion that I regard that as the wrong way to go," he said. "An excessive, permanent increase in money is, in my view, an indirect manipulation of the (foreign exchange) rate."

Foreign exchange rates should be determined by markets, said Bruederle, who was attending the G20 meeting in place of Germany's hospitalised finance minister.

Bruederle said he was positively surprised by the results of the meeting, which he said surpassed expectations.

There were intensive discussions at the meeting about a letter from the US Treasury Secretary calling for action in tackling foreign exchange and trade imbalances, Bruederle said.

Geithner's focus was on China, but Germany, Japan and Korea were also in focus, Bruederle said, adding that he regarded the US plans as having "planned economy elements".