Role of The G7 Countries In Forex
The G7 stands for the group of seven countries which happen to be the world’s richest economies. The member countries are the United States of America, United Kingdom, Canada, France, Germany, Italy, and Japan. It has also been named as the G8 with the inclusion of Russia after the fall of the Soviet Union.
The role of the G7 Countries in forex is quite significant. The group of G7 countries held its first meeting in 1973 as G5, because at that time there were only five countries in this group. The meeting was organized as a result of the collapse of the Bretton Woods Agreement, the first oil shocks, and recession in the world economy. This meeting is considered as the first formal occasion which marked the presence of the G7 countries in forex.
Nowadays, the role of g7 countries in forex has become more important and the leaders of the G7 countries meet at least once in a year to discuss the various issues and currency trading is one of them. Also, there are meetings organized of lower-echelon ministers between the yearly meetings.
Some experts believe that the G7 meetings are meant only for photo opportunities of grinning world leaders and colorful flags sharing the same stage and there is no role role of the G7 Countries in forex anymore. However there are occasions when these G7 countries work together to influence currency levels, as they did in the mid-1980s.
The details of emergency meetings held by the G7 countries are usually leaked to the press. There are few incidents of these meetings which were leaked to the media. One such event is from the 1997 G7 meeting at Denver, Colorado, where the U.S. economy was starting to roar ahead on the gains of the Internet boom. In a jovial mood, the U.S. President Bill Clinton presented the other world leaders with cow- boy boots. The other world leaders, who were leading struggling economies, were not amused. However in the G7 meeting in 2003, there was discussion regarding the currency markets. The European countries urged the United States to help boost the dollar, which had lost significant ground against the euro. This was having a bad effect on European economies as it was making Europe’s exports more expensive in world markets. The American officials, however, publicly indicated that the dollar’s level was fine, and the G7 meeting ended with no resolution on the disparity.