Global Economics

EU Officials Voice Concern at Strong Euro


The bloc's finance ministers expect U.S. authorities to act to boost the weak dollar, which is hurting European exporters

EU finance ministers and the head of the European Commission have voiced concern over the record strength of the euro against the US dollar, in comments aimed at the US authorities rather than the monetary policy of the eurozone's central bank.

Commission President Jose Manuel Barroso admitted to journalists at a Brussels conference on Tuesday (4 March) that the rise of the common currency against the dollar is a "matter of concern in some sectors of our economy."

A similar message came out of the regular meeting of eurozone finance ministers on the eve of the full 27-strong ministerial session on Tuesday, with Jean-Claude Juncker, the Luxembourg leader and the eurogroup chief saying: "In the present circumstances we face, we are concerned about excessive exchange rate moves."

"We have never previously said that we were concerned," he told a press conference. "We continue to believe that exchange rates should reflect economic fundamentals. We still maintain that excessive volatility and disorderly movements in exchange rates are not desirable for economic growth."

Earlier this week, the euro reached what French finance minister Christine Lagarde later referred to as a "psychological threshold" of $1.50, with the latest surge explained by analysts as being caused by speculations of a US interest rate rise in March.

The strong euro is harmful for European exporters, particularly for French and German producers, although it also weakens the negative effect of high oil prices -- which are calculated in dollars -- for Europeans.

While keeping firm on the importance of the independence of the European Central Bank (ECB) and its monetary decisions, Mr Juncker suggested that Europe expects US authorities to act towards boosting the dollar, as earlier suggested by US Treasury Secretary Henry M. Paulson.

"As we have done before, we have noted comments made by the US authorities who have reaffirmed that a strong dollar is in the interest of the US economy," said Mr Juncker.

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