European employers' chiefs on Thursday urged euro zone leaders, heading to China on Sunday to discuss exchange rates, to call for a revaluation of the yuan by Beijing. In a letter to European Central Bank governor Jean-Claude Trichet made public on Thursday, Juergen Thumann, president of BusinessEurope, said “Chinese authorities need to reconsider the appreciation of the renminbi.” He said Beijing has to “introduce more flexibility” into its currency system while simultaneously demanding that “US authorities make real their pledge of a strong dollar policy.” Trichet will be joined by outgoing European Union Economic and Monetary Affairs Commissioner Joaquin Almunia and the formal head of the group of 16 countries that use the euro, Luxembourg Prime Minister Jean-Claude Juncker, at talks with Chinese Premier Wen Jiabao. These precede the first full summit between the EU and China in two years, after last year's was cancelled amid Beijing protests at French President Nicolas Sarkozy hosting Tibet's spiritual leader the Dalai Lama. Almunia said last week the EU would like to see Beijing de-link the yuan from its de facto peg to the US dollar and eventually revalue the Chinese currency. Europe fears that the rise of the euro against the yuan will reduce EU exports to China, as they become more expensive, and could eventually slow the continent's economic recovery from the financial crisis. Although China has insisted the value of the yuan fluctuates against a basket of currencies, the currency it has for all intents and purposes been pegged to the weakening greenback since 2008. Last week, International Monetary Fund chief Dominique Strauss-Kahn urged Beijing to let the yuan rise “sooner rather than later,” saying it would benefit both China and the global economy. In London, meanwhile, the dollar slumped to a 14-year low point against the yen on Thursday, prompting fears that a further surge could hurt a fragile recovery in Japan, the world's second largest economy. Gold scored yet another record high, breaching $1,195 an ounce as the US currency waned. During Asian trading, the dollar slid to 86.28 yen, the lowest level since July 1995. In later European deals, the dollar stood at 86.64 yen compared with 87.38 yen late on Wednesday in New York. The euro fell to $1.5085 from $1.5127 late Wednesday. The euro was changing hands at $1.5085 against $1.5127 late on Wednesday, at 130.70 yen (132.21), 0.9117 pounds (0.9056) and 1.5086 Swiss francs (1.5080). The dollar stood at 86.64 yen (87.38) and 1.0001 Swiss francs (0.9965). The pound was at 1.6646 dollars (1.6703). On the London Bullion Market, the price of gold rose to $1,183.13 an ounce from $1,179.75 an ounce late on Wednesday. Earlier Thursday it had struck a record high at $1,195.13 an ounce. Responding to the yen's surge, Japan's Prime Minister Yukio Hatoyama said his government must take measures to avoid a double-dip recession. “We must take measures so that the economy will not fall into a double-dip” recession, said Hatoyama, without specifying what measures his government may take to boost the world's second largest economy. The premier stressed that “rapid and drastic movements in foreign exchange are not desirable.”
