FRANKFURT (Thomson Financial) - The German government is against any intervention to prop up the US dollar, according to Der Spiegel magazine, citing an internal finance ministry document prepared ahead of the weekend G7 meeting of finance ministers and central bank presidents in Washington.

It said so-called verbal intervention -- where key government and central bank officials give comments to support the dollar -- will also not have any impact in terms of strengthening the dollar.

The ministry said it is also hardly possible to finance outright intervention in foreign exchange markets given the size of funds needed for any such action to have an impact at all.

It said another possible instrument to support the weak dollar is for the European Central Bank to cut euro zone interest rates but that the German government views such a move with scepticism even though it will narrow the interest rate differential between the euro and the dollar.

The paper noted too that a rate cut by the ECB is 'extremely unlikely' right now given the high inflation rate, Der Spiegel said.

marilyn.gerlach@thomson.com

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