Eurozone finance ministers on Tuesday stepped up pressure on the United States to show its strong dollar policy was more than just rhetoric even though they feared their calls were falling on deaf ears. Ministers meeting in Brussels on Monday and Tuesday urged the world's biggest economy to slash budget and trade deficits that are undermining the dollar and said unanimously that recent moves in the foreign exchanges were unwelcome.
The blunt calls came during US Treasury Secretary John Snow's tour of Europe and highlighted their growing intolerance of a slide that has taken the dollar to record lows past $1.30 per euro, to the detriment of eurozone exporters.
But Luxembourg Prime Minister and senior eurozone spokesman Jean-Claude Juncker said he believed the United States was not heeding calls for action to revive the dollar's fortunes.
"I think there's an underdeveloped sense of hearing in the United States," he told reporters during a meeting of European Union finance ministers.
He said ministers were preoccupied by the fact that the euro was having to bear the brunt of the dollar's slide but added that he believed China was increasingly aware of its role in the international monetary system.
"I have the impression that China is beginning to become more aware of its international monetary responsibility," said Juncker, who held talks in Beijing last week.
During his visit to Dublin on Monday, Snow said the United States still backed a strong dollar policy, but it was up to financial markets to set exchange rates.
"We support a strong dollar. A strong dollar is in America's interest," Snow said.
In London on Tuesday Snow said the US budget deficit was too big, but insisted there was no need to cut spending on the "war on terror.
Juncker and others at the EU finance ministers' meeting in Brussels highlighted the risk a low dollar posed to the eurozone economy and stressed weak economic activity in the bloc would not be good for the United States at the end of the day.
Others around Europe echoed those worries at a time when the economic damage inflicted by oil prices' recent rise to record highs has yet to become fully apparent.
"Every one of us is worried when we think about the oil price and think what effects it has on exports and not only on exports. And everyone is worried when they think about the euro/dollar rate and what effect this has on exports and not just on exports," German Chancellor Gerhard Schroeder said in Berlin.
Eurozone ministers shied away from talking about the possibility of central bank intervention to halt the dollar's fall and persuasion seemed to be their main tactic for now.
"We need a good dialogue with the United States," said Belgian Finance Minister Didier Reynders.
"In the G7 (Group of Seven industrial nations) ... and all meetings it is important to repeat that all regions of the world economy need to get to a balanced situation. It is also the case for the United States for the budget situation and trade."
That is expected to be the theme when G7 finance ministers meet in Berlin later this week as part of a broader gathering of 20 rich and emerging market economies.
Central bankers will also attend that meeting, and the European Central Bank is likely to deliver the same message.
ECB President Jean-Claude Trichet has already warned that the euro's recent moves have been "brutal" and hammered home the undesirability of sharp and pronounced changes in the value of major currencies.
Bank of France Governor Christian Noyer, who sits on the ECB's Governing Council, repeated that sentiment in an interview published on Tuesday in French daily Les Echos.
While such warnings have put a temporary lid on the euro's gains against the dollar, currency analysts are convinced that further dollar losses are inevitable given the size of the US current account and budget deficits.
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