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G7 Finance Ministers Reach Agreement on Exchange Rates


Finance ministers from the world's richest industrial countries meeting in Florida say they have found a common position on exchange rates.

British chancellor of the exchequer, Gordon Brown, said there have been positive and constructive talks leading to an agreement on recent currency market swings. The Reuters news agency quotes Germany's finance minister, Hans Eichel, as saying a consensus has been reached.

News reports say the G7 nations will call for stability in the euro/dollar exchange rate. An announcement is expected later Saturday.

The announcement will follow two days of meetings in Boca Raton that focused on ways to increase global growth in the face of the continuing decline of the dollar and mounting U.S. deficits.

In recent weeks the dollar has slid sharply, reaching record lows against the euro, the common currency of 12 European nations. The high euro makes European goods more expensive on the world market and threatens the region's fragile economy recovery.

However, U.S. officials had appeared ready to allow the dollar to remain low, especially in an election year, because a cheap dollar increases American exports, which help reduce the country's trade deficit.

The U.S. treasury secretary, John Snow, said earlier that he thinks the U.S. deficit is too large. The Bush administration plans to cut it by half in the next five years.

A cheap dollar poses less of a threat to Japanese exports because the Japanese government routinely intervenes in currency markets.

The G7 officials were also expected to discuss reconstruction in Iraq, as well as financial measures in the battle against terrorists.

The G7 countries include Britain, Canada, France, Germany, Italy, Japan and the United States.