The Evian Accord?

29 May 2003

Global currency agreements, like the Plaza and Louvre accords, supposedly went out of fashion in the late 1980s. After a 20 year absence, they might be about to make a comeback.

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Presidents from the Group of Eight industrialised nations meet in Evian, France this weekend. At warmup meeting before the summit, Finance Ministers said that boosting global growth was the G8's top priority but declined to comment on how exchange rates might affect the world economy.

Since its peak in 2002, the dollar has depreciated by almost 30% against the euro. However, the Federal Reserve's broad tradeweighted index has only fallen by 8%. The head of the International Monetary Fund, Horst Koehler said in a newspaper interview this week that major governments and central banks at some point would need to stop the dollar's rapid decline.

There is a point at which the accelerating depreciation of the dollar demands that governments and central banks act together, he told Handlesblatt.

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