FOREX-Dlr pares losses, Geithner calls for rebalancing

* Geithner calls for G20 not to block currency appreciation

* Doubts remain on coordinated G20 action on forex

* Dollar index up 0.3 pct at 77.667 (.DXY: )

* German Ifo index unexpectedly rises in October

(Releads, adds quotes, changes dateline from TOKYO)

By Tamawa Desai

LONDON, Oct 22 (BestGrowthStock) – The dollar pared its losses 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 “countries with
persistent surpluses should undertake structural, fiscal and
exchange rate policies to boost domestic sources of growth”.

A financial source who met with Geithner in South Korea said
that the U.S. official had asked countries to limit their
current account surpluses or deficits to 4 percent of gross
domestic product. But that seemed to be something that few G20
members felt able to accept. [ID:nTOE69L00U]

As such, many in the market were 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 0812 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 0.3 percent at 77.667 (.DXY: ).

“We are not looking for something significant from the G20,
although in the statement they could portray competitive
devaluation as something that is negative,” said Lee Hardman,
currency economist at Bank of Tokyo-Mitsubishi UFJ.

“Some form of current account target, if introduced, would
be a positive step, but I can’t see that gaining consensus.”


GRAPHICS fx tensions package

FX tensions interactive map:

Asset returns since QE2 hints

China data package


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.”


Still, analysts expect the dollar to stay under pressure on
expectations for the U.S. Federal Reserve to 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,” BTM-UFJ’s Hardman said.

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 then fell back to $1.3872, down 0.3 percent
(EUR=: ).

The dollar slipped 0.1 percent to 81.30 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 Japan intervened in September for the first time in six

“People are just not quite sure what Japan’s tactics are on
the currency and how afraid they should be. But clearly there is
a little bit of unease about putting on a fresh short position
from here,” said Sean Callow, a currency strategist at Westpac
Bank in Sydney.
(Additional reporting by Hideyuki Sano in Tokyo; Editing by
Hugh Lawson; Graphics by Scott Barber)

FOREX-Dlr pares losses, Geithner calls for rebalancing