The Group of Eight (G8) economies will be meeting with the the G5 emerging economies and China wants to explore the possibility of having a new global reserve currency. This request drove the dollar to a three-week low in the last mid-week trading day.
Fellow Asian power, Japan, however, calls on other countries to continue backing the greenback. Japan argues for the difficulty of replacing the dollar as the world’s reserve currency, making public its objections to China’s proposition. In addition, Japan says that it is against any move that compromises the dollar’s strength.
“Japan’s stance is that major countries should support the dollar,” Yoichi Suzuki, director-general of the Japanese foreign ministry’s economic affairs bureau, told Reuters in an interview. “It won’t benefit any country to talk about ideas for a new global key currency, which would weaken the dollar.”
Part of China’s proposal was to replace the dollar with the IMF’s Special Drawing Rights (SDR).
Source: CNN
