Dollar Edges Up But Developing Nations Still Worry

TALI ARBEL

NEW YORK (AP) — The dollar edged up Thursday, breaking a decline that's caused developing countries to worry that the sinking U.S. currency is making their exports expensive and threatening their fledgling economic recoveries.

A lower dollar — and China's yuan, which is effectively pegged to the dollar — makes other countries' goods relatively more expensive. China has recently signaled that it might be ready to let its currency rise.

American manufacturers contend that China's yuan is undervalued by 20 to 40 percent against the dollar, giving the country a huge trade advantage. On the other hand, the yuan's low value allows U.S. consumers and major retailers, such as Wal-Mart, to buy Chinese imports cheaply.

Finance ministers from 21 Asia-Pacific countries agreed Thursday to embrace more flexible exchange rates. Their official statements downplayed China's refusal to let the yuan appreciate over the past year and a half. But their commentary signaled the distress countries are feeling as their currencies rise against the yuan and the dollar.

"The weaker yuan is hurting and slowing the recovery" as other countries' exports face tough competition from cheaper Chinese goods, said Forex.com chief currency analyst Brian Dolan.