US's Lew: G7 needs to reinforce pledges against currency devaluations

[WASHINGTON] US Treasury Secretary Jacob Lew said on Friday it was important for Group of Seven major economies to reinforce their pledges to refrain from competitive currency devaluations at their meeting next week, adding that also applied to the United States.

Mr Lew also said he would continue to work to support the dollar's status as the global reserve currency, saying it was"the definition of safety."

"We have exhorted countries to adhere to the commitments that we've made for the G7 and G20, because if other countries start moving towards competitive devaluation, it will start a chain reaction," Mr Lew said at a Christian Science Monitor media breakfast. "If country A does it, country B will do it and country C will do it, and pretty soon you're battling over shares of a shrinking global pie."

Asked about recent comments from expected Republican presidential nominee Donald Trump that the strong dollar was a problem for the US economy, Mr Lew said the dollar's current strength was a result of stronger growth in the United States.

"The answer is for other economies to strengthen. It's for regions like Europe, countries like China and Japan, to take the steps that they need to take to have their economies produce enough demand, enough economic activity so that the exchange rates naturally equilibrate through market mechanisms," Mr Lew said.

Mr Lew also said that at the May 20-21 G7 finance ministers and central bank governors' meeting in Sendai, Japan, he will emphasize the need to avoid a "dramatic crisis" over Greece's bailout terms as debt repayment deadlines approach in July.

Mr Lew reiterated the US view that there needs to be more debt relief for Athens, and that European demands for fiscal savings are too high, adding: "there will have to be some give in these conversations."

"Particularly at a time when you're approaching a vote in the UK on Brexit, it would be a very unfortunate moment to have another round of high-wire negotiations on Greece," Mr Lew said.

Regarding Puerto Rico's debt crisis, Mr Lew said time was running short for Congress to pass legislation allowing for a "debt restructuring that works. It can't be something that's just called a restructuring."

REUTERS