FOREX-Dlr holds steady, Geithner calls for rebalancing

* Geithner calls for G20 not to block currency appreciation

* Doubts remain on coordinated G20 action on forex

* Dollar index up 0.1 percent at 77.513 (.DXY: ).

* German Ifo index unexpectedly rises in October

(Adds quote, updates prices)

By Tamawa Desai

LONDON, Oct 22 (BestGrowthStock) – The dollar steadied on Friday on
wariness over whether any clear agreement would be reached at a
Group of 20 meeting, as the United States called for countries
to avoid using their currencies to gain an economic advantage.

U.S. Treasury Secretary Timothy Geithner, in a letter to
finance leaders that was seen by Reuters, said emerging
economies with undervalued currencies and solid reserves must
allow their currencies to adjust in line with fundamentals,
[ID:nTOE69L05V] while a G20 source told Reuters he also called
for a 4 percent cap on current account imbalances.
[ID:nTOE69L054]

“A new currency accord will be hard to achieve in principle
and even harder to push through in practice, over the hurdles of
domestic political pragmatism,” said Lena Komileva, head of G7
market economics at Tullett Prebon.

Many in the market were also sceptical of whether a binding
agreement would be reached. But they remained cautious about any
surprises such as a formal pact to allow Asian currencies to
appreciate.

By 0925 GMT, the dollar index (Read more about the global trade. ), which tracks the performance
of the greenback versus a basket of six other major currencies,
was up 0.1 percent at 77.513 (.DXY: ).

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For graphics on FX tensions, please click on

http://r.reuters.com/deh58p

FX tensions interactive map: http://r.reuters.com/jec96p

Asset returns since QE2 hints: http://r.reuters.com/kyw48p

China data package: http://link.reuters.com/tuz49p

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Geithner also said “to facilitate the orderly rebalancing of
global demand, G20 countries should commit to refrain from
exchange rate policies designed to achieve competitive advantage
by either weakening their currency or preventing the
appreciation of an undervalued currency.”

FED IS THE STORY

Still, analysts expect the dollar to stay under pressure
from expectations that the U.S. Federal Reserve will pump more
money into the economy at a policy meeting next month. That has
helped push the dollar down more than 7 percent against other
major currencies since September.

“The dollar remains on the back foot until the Fed; that is
the main story,” said Lee Hardman, currency economist at Bank of
Tokyo-Mitsubishi UFJ.

The euro briefly made up its losses and rose 20 pips against
the dollar after the German Ifo institute’s business sentiment
index unexpectedly rose in October to 107.6 from 106.8.
[ID:nBAE003838] It was last flat at $1.3911. (EUR=: )

“Economic indicators in the euro zone have consistently
surprised to the upside recently, and this is likely to put
further upside pressure on the euro in the coming weeks,”
analysts at Credit Agricole CIB said.

The dollar slipped 0.3 percent to 81.28 yen (JPY=: ), holding
above a 15-year low of 80.84 yen hit earlier this week and a
record postwar low of 79.75 yen set in 1995.

Wariness about intervention has kept the dollar supported,
after Tokyo stepped into the market in September for the first
time in six years.
(Editing by Hugh Lawson/Ruth Pitchford; Graphics by Scott
Barber)

FOREX-Dlr holds steady, Geithner calls for rebalancing