August 25, 2010 / 4:00 PM / 9 years ago

France to press G20 to curb currency swings -Sarkozy

PARIS, Aug 25 (Reuters) - France will ask G20 countries to examine ways to curb excessive exchange rate and commodity price volatility and pursue the idea of a financial transaction tax when it holds the presidency of the Group of 20 economic powers in 2011, President Nicolas Sarkozy said on Wednesday.

Addressing a diplomats’ conference in Paris, Sarkozy said that he was not seeking a return to fixed exchange rates but that G20 countries needed to find ways to limit excessive exchange rate swings and the economic imbalances they create.

“Who would challenge the fact that exchange rate instability poses a major threat to global economic growth?” asked Sarkozy.

He said that the current main forum for discussion of exchange rates was the narrower G7 club but that China must not be excluded from such discussions.

“What we surely need to do is go further and map out a new framework for consultation on exchange rate developments,” said Sarkozy.

“But how can we discuss exchange rates nowadays without China? We need to debate a better way of responding on this critical matter.

South Korea currently holds the presidency of the G20, which spans the world’s largest industrialised and rapidly developing economies, and Seoul will host a summit in late November before the French take over the reins at the start of 2011.

Sarkozy said that commodity price volatility, highlighted by the current surge in wheat prices, was also highly destructive and that G20 countries should regulate commodity derivatives just as it is seeking to do so for other financial derivatives.

“That way we will limit speculation,” he said. (Reporting by Brian Love and John Irish; Editing by Hugh Lawson)

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