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UPDATE 1-Russia does not see dollar debate at fin min G20

Published 10/30/2009, 01:40 PM
Updated 10/30/2009, 01:42 PM

* U.S. seems not ready to discuss dollar beyond G20

* BRIC ministers also not planning dollar talks

* Coordination of exit strategies on agenda instead

(Adds background)

By Toni Vorobyova

MOSCOW, Oct 30 (Reuters) - The dollar is unlikely to be a major topic at next week's meeting of G20 finance ministers as the United States seems uncomfortable with discussing the topic in such a large group, a Russian delegation source told Reuters.

The dollar has sunk to its lowest levels versus the euro in over a year and has also fallen versus most other currencies, including the rouble, over the past 2 months.

This has prompted some concerns that export competitiveness could be hurt, potentially threatening a fragile economic recovery from the recession.

"There are no plans (to discuss dollar weakness)," the source said on Friday. "I am not at all sure the Americans would be ready to discuss this topic in this format. So far the only format in which they are ready to discuss it is the G7."

The dollar is also not on the agenda for a meeting of deputy finance ministers from the Brazil, Russia, India and China (BRIC) grouping of major emerging economies on the sidelines of the G20, the source said.

Russia's central bank has been intervening in the currency market to slow down -- but not stop -- the rouble's rally.

Despite rising some 10 percent versus the dollar in two months, the rouble has only reversed half of its late 2008-early 2009 devaluation and is weaker than the levels seen a year ago when oil prices were last so high.

Although a deputy economy minister has said further rouble gains could threaten the recovery, most officials -- including Prime Minister Vladimir Putin -- have so far remained sanguine about the currency appreciation, saying it has pluses as well as minuses.

Other countries seem more worried though, with dealers citing talk of possible Swiss National Bank intervention to restrain its currency on Friday and the EU's top economic official calling on major powers to coordinate to limit foreign exchange volatility.

COORDINATING EXITS

Instead of the dollar, the G20 ministers meeting in St Andrews, Scotland, are set to discuss reform of international financial institutions such as the World Bank, financial regulation, and the strategy for unwinding anti-crisis measures in the global economy.

"When and how to launch exit strategies (will be discussed), and how to carry out coordination -- in the framework of the G20 or in some other format," the source said.

In September in Pittsburgh, G20 leaders pledged to keep emergency economic support in place until sustainable recovery was assured, an increasingly sensitive issue for global financial markets.

Russia sees its budget for the next three years as its crisis exit strategy, with the deficit set to be gradually reduced to 3 percent of gross domestic product (GDP) in 2012 from around 8 percent expected this year.

In Pittsburgh, the G20 agreed that their summits would supplant those of the Group of Seven nations as the high table of global policy making, promising to give rising powers such as China more say in rebuilding and guiding the world economy. (Editing by Andy Bruce)

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