G7: Obama did not say strong dollar a problem – US official

A US official on Monday disputed a French source’s account that President Barack Obama had told his allies at a G7 summit the strong dollar posed a “problem”.

Amid mounting fears over the Greek debt turmoil’s impact on the fragile global economy, a US official said: “The President did not state that the strong dollar was a problem.

“He made a point that he has made previously a number of times: that global demand is too weak and that G7 countries need to use all policy instruments, including fiscal policy as well as structural reforms and monetary policy, to promote growth.”

Fears over Greece’s finances have weakened the euro sharply in the last four months, with the single European currency trading at close to parity with the dollar in May. On Monday, the euro was trading at $1.1143.

Obama in Chicago

A French diplomatic source had said earlier Monday that Obama told participants at the summit in southern Germany that the “strong dollar posed a problem.”

A highly valued currency weighs on the competitiveness of a country’s industries and exports.
The French source added Athens’s woes and the “volatility” they have created on world markets had been a key topic of discussion at the meeting of the leaders of Britain, Canada, France, Germany, Italy, Japan and the United States.
International Monetary Fund chief Christine Lagarde, who is also attending the meeting, is due to hold bilateral talks with various leaders at the summit, another French source said.

The IMF is one of Greece’s main creditors along with the European Commission and the European Central Bank.

The United States has long called on European leaders to resolve the Greek debt turmoil as quickly as possible given its negative impact on a shaky global economy.

Greece’s radical-left government and its creditors have been negotiating for five months on reforms needed to unlock 7.2 billion euros ($8 billion) in rescue funds that Athens desperately needs.