Japanese officials, who had talked up the prospect of a dollar debate, yesterday conceded that while financial markets would be discussed, the dollar was unlikely to be debated in isolation. President Bill Clinton last weekend ruled out any 'unusual actions' to support the dollar, but yesterday he urged Washington's Group of Seven allies to do more to encourage global growth. Mr Clinton said that after his budget deficit reduction measures 'we now have the standing to speak and the credibility to be heard. And we will say to our partners: we have done our part; you must do yours.'
His comments appeared to rekindle US demands for lower German rates, though analysts see little prospect of the Bundesbank cutting key rates until later this summer. The US is also pressing for Japanese income tax cuts to boost domestic demand and curb the Japanese trade surplus. Once enacted, these measures might help to support the dollar.
Mr Waigel said the value of the dollar was 'not firmly and specially a problem for the Germans' - a comment that matched those of US officials who have hinted that the rising yen is an issue Japan can address by opening its markets.
Analysts were meanwhile less confident that the US Federal Reserve was about to raise short-term interest rates. Some argued that the US central bank might wait until after the release of the June US employment report.
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