Replies to post #2875 on FOREX TRADERS

[Ataglance2]

The ECB's [GONZALEZ-PARAMO] has welcomed China's FX revaluation of 2005, but says more is needed. In an echo of the G7 communique he goes on to say that FX rates should reflect fundamentals, and that emerging Asia FX flexibility is essential to addressing imbalances. He does, though, say that sharp and disorderly FX moves are not good for growth and that any such moves should be addressed in a co-ordinated fashion. The build-up of large FX reserves by the emerging Asian economies is one obvious area of imbalance, though the US" twin deficits are also of concern. Some in the markets are wondering if buried within the G7 statements is the intention to help the US resolve those - ie work towards a controlled lowering of the Usd.