TOKYO, Feb 8, 2008 (AFP) – World finance chiefs will try to bolster confidence in the faltering global economy when they meet Saturday amid signs of trans-Atlantic friction over how to respond to recent market mayhem. Washington’s calls for other major economies to boost domestic demand seem set to fall on deaf ears as Japan and European nations are loath to worsen their public finances to tackle what they see as largely a US-made crisis.
European nations for their part are increasingly concerned about the weakness of the dollar and the yen against the euro, which acts as a brake on their exports.
The Federal Reserve has slashed interest rates by more than two percentage points since September amid growing fears that the US economy is slipping into recession, contributing to the weakness of the greenback.
But the United States and Japan have shown little appetite for any shift from the G7’s well-worn call for currencies to reflect fundamentals.
“The Europeans are still concerned they’re bearing the brunt of the necessary currency adjustment,” said National Australia Bank analyst John Kyriakopoulos.
“Obviously the message is coming out of Japan that currencies won’t be at the top of the list of