Dollar’s Reserve Status Safe For Now

The G 8 summit this week is the focus of Forex traders and investors and those who follow currency movements. There has been speculation that China or Russia would force a discussion of the US dollar’s reserve currency status but according to a statement by an unnamed source the reserve status of the US dollar will probably not be mentioned in the final communiqué issued by the group. According to the anonymous source, “It is expected to be mentioned and discussed remotely.  But the discussions have not yet reached the level of putting it in writing in the communiqués.”

China Says Dollar is Still Important Reserve Currency

The G 8 summit will also include Brazil, India, China, Mexico and South Africa and Egypt. This summit dubbed the ‘G 14’ will meet on July 9th to discuss climate issues, trade and financial issues. China has asked for a discussion of proposals for a new global reserve currency or currencies. In a reassuring statement Chinese Vice Foreign Minister He Yafei told the press, “The U.S. dollar is still the most important and major reserve currency of the day, and we believe that that situation will continue for many years to come. You may have heard comments, opinions from academic circles about the idea of establishing a super sovereign currency. This is all, I believe, now a discussion among academics. It is not the position of the Chinese government.”

Canada Says Dollar a Stabilizing Force

Canadian Finance Minister Jim Flaherty joined in the discussion saying that the US dollar has been a stabilizing force during the current global recession. Flaherty said he expects a general discussion of foreign exchange rates during the G8 summit but is unsure if the results of that discussion would be in the final communiqué. This weeks meeting will start with the G 8 nations meeting alone and later meetings will include representatives of emerging nations.