Greek PM Pushes US To Probe Forex Speculation

WASHINGTON -(Dow Jones)- Greek Prime Minister George Papandreou is pushing U.S. officials to investigate speculation in euro currency markets he says is driving up Greek borrowing costs.

Ten-year bond offering by Greece on last week had a yield of 6.3%, about twice as much as the German government pays to borrow funds.

“We will have a very hard time implementing our reform program if the gains from our austerity measures are swallowed up by prohibitive interest rates,” Papandreou said.

Earlier this month, Papandreou unveiled a package of tax increases and spending cuts aimed at bringing down soaring budget deficits.

Papandreou is scheduled to meet with President Barack Obama Tuesday where he plans to push for a revitalization of economic cooperation between the countries.

Papandreou also is scheduled to meet with U.S. Treasury Secretary Timothy Geithner.

“It is an encouraging sign that the American authorities have ordered some speculators not to destroy records of their trading in euros,” he said at a speech at The Brookings Institution on Monday. “If Europe and America jointly step in to shore up global financial regulation–and to finally ensure enforcement of regulations–we can curtail such activities.”

Papandreou has been pushing Group of 20 leaders to curb speculative trading activity, warning that a failure to address such practices could spark another financial crisis. There needs to be “clear rules on shorts, naked shorts, and credit default swaps,” he said.

Papandreou said it is crucial for Europe to support Greece and added that requests for support aren’t about “asking Europe to rush to the aid of a reckless country.

“On the contrary, standing by Greece, as it makes deep and responsible reforms, is in the interests of Europe as a whole.”

Papandreou acknowledged a need to reform Greece’s tax enforcement policies and vowed to prosecute evaders. “Fewer than 5,000 Greeks declare incomes of EUR100,000 or more. That pattern ends now,” he said.

Greece is the E.U.’s most indebted country.

Meena Thiruvengadam, Dow Jones Newswires