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Dollar keeps climbing as G7 meet on world economy

11 May AFP

The US dollar pushed higher Friday and the yen sagged as the finance chiefs of the G7 began meeting outside London on global economic challenges and Japan stuck to its guns on monetary easing.

The euro dropped back below the $1.30 line while the dollar almost touched 102 yen, underscoring the better economic shape the US finds itself in than its G7 brethren.

At 2200 GMT the euro was at $1.2993, down from $1.3044 late Thursday.

The dollar traded at 101.62 yen, compared to 100.55 yen a day earlier.

The euro also gained on the Japanese currency, rising to 132.03 yen from 131.17.The Group of Seven top economies opened fresh talks on spurring growth Friday amid US-Europe divisions over the scale of austerity and renewed market focus on “currency wars” after the yen hit new dollar lows.

The two-day meeting in Aylesbury, northwest of London, is also being attended by top representatives from the European Union and International Monetary Fund.

“Our task is to nurture the recovery,” British finance minister George Osborne said.

The meeting began a day after the dollar cracked the 100 yen level for the first time in four years, marking a 30 percent climb since last September as Japan sharply expanded its stimulus program, aiming to pull out of deflation.

The fall in the Japanese currency has given its domestic economy a boost.

But economic rivals are worried that the Bank of Japan has deliberately sought to push down the yen's value to gain international competitiveness.

Japanese Finance Minister Taro Aso defended the policy Friday before leaving Tokyo for the G7 meeting.

“We are not touching on the currency market but rather trying to exit from deflation,” he told reporters.

Kathy Lien of BK Asset Management said the yen's fall was predictable and didn't foresee a reversal soon.

“The Bank of Japan has eliminated any reason to buy yen over the next two years and local investors are finally beginning to realize it,” she said.

The dollar also gained on the British pound Friday: the pound slipped to $1.5354 from $1.5451. And the dollar rose to 0.9560 Swiss francs from 0.9479 francs.

 

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