Oct. 2 (Bloomberg) -- Finance chiefs headed for Group of Seven talks in Istanbul pushing for a “strong dollar” amid concern its slide will impede their recoveries from the worst global recession since World War II.

“Everyone needs a strong dollar,” French Finance Minister Christine Lagarde told reporters in Gothenburg, Sweden, today as she met European Union counterparts. “We’ll have a chance to discuss this in the coming days.”

Her comments came four days after similar remarks from European Central Bank President Jean-Claude Trichet. Treasury Secretary Timothy Geithner yesterday also pledged support for a “strong” currency. G-7 officials meet tomorrow and will then brief reporters. A French official said they will release a statement after members earlier debated the need for one.

The dollar’s 13 percent fall this year against a basket of seven currencies threatens foreign economies by making their exports more expensive. At the same time, Geithner is being forced to defend its status as the world’s sole reserve currency.

“Market-moving announcements could be forthcoming,” said Geoffrey Yu, a foreign-exchange strategist at UBS AG in London. “We expect to hear renewed commitments to the U.S. strong dollar policy and the European delegation may be tempted to communicate their worries on further rises in the euro.”

G-7 Statement

The dollar has dropped almost 17 percent against the euro since Feb. 18 and slipped as much as 0.7 percent today as employers eliminated more jobs last month than economists forecast. Against the euro, it traded at $1.4601 at 7:37 p.m.

G-7 members have debated whether to break with tradition and not release a communiqué given the G-20’s leaders did so just a week ago after meeting in Pittsburgh. The G-7 is gathering in Istanbul before next week’s annual meetings of the International Monetary Fund and World Bank.

Limiting the G-7’s scope to reverse the decline in the dollar is the absence of China in its ranks and the G-20’s push for a narrowing of global imbalances such as the U.S. current account deficit.

Other policy makers have also expressed concern about the dollar this week. Japanese Finance Minister Hirohisa Fujii said Sept. 29 that the government may act to stabilize the foreign- exchange market and denied he supported a stronger yen. He won’t discuss the yen’s gains at the G-7, Kyodo News reported today.

Yen Strength

Canon Inc., Japan’s biggest maker of office equipment, says every 1 yen increase against the dollar will lower its second- half operating profit by 4.2 billion yen ($47 million). The company based its profit forecast of 110 billion yen on the assumption the yen would average 95 to the dollar in the last six months of the business year. The yen traded at 89.65 to the dollar today.

Still, John Lipsky, the IMF’s first deputy managing director, told Bloomberg Television today that at present “there is not a problem in broad terms of valuation of the principle currencies.”

Canadian Finance Minister Jim Flaherty yesterday pushed China to let its yuan appreciate “more quickly” after keeping it little changed against the dollar for more than a year.

That view was echoed today by IMF Managing Director Dominique Strauss Kahn, who said he still views the yuan as “undervalued.” The IMF was last week tasked by the G-20 with monitoring its members’ efforts to even out the world economy.

Inflexible China

China has frequently ignored campaigns by the G-7 for a more flexible exchange rate. It took almost two years to heed a request to loosen a currency peg with the dollar, only doing so in July 2005. The inflexibility helps Chinese exporters and means other currencies shoulder the burden of the weaker dollar.

While the dollar’s slide may buoy the U.S. economy by boosting demand for its goods, World Bank President Robert Zoellick repeated today that it may lose its rank as the only reserve currency if budget deficits aren’t curbed. For now, it should still attract investors as a safe haven, he said.

“The American public and the American political leaders take for granted the unique standards of having the reserve currency,” Zoellick said. “You could lose what is an incredible thing to have.”

To contact the reporters on this story: Simon Kennedy in Istanbul at skennedy4@bloomberg.net; Matthew Brown in London at mbrown42@bloomberg.net

Last Updated: October 2, 2009 12:48 EDT