Finance ministers from the 13- nation bloc sharing euro failed
Monday to seek a tougher stance against the appreciation of their
single currency versus the US dollar, taking China's RMB as an easy
target.
European Central Bank
President Jean-Claude Trichet (L) and Luxembourg's Finance Minister
Jean-Claude Juncker arrive at a Euro zone finance ministers meeting
in Luxembourg October 8, 2007.
"We affirm that exchange rate should reflect economic
fundamentals and that excess volatility and disorderly movements in
exchange rates are undesirable for economic growth," the eurozone
finance ministers said in a statement after a meeting in Brussels
on Monday, which only repeated their previous words.
The ministers were attempting to find a common line for the euro
zone in the upcoming meeting of the Group of Seven (G7) leading
industrialized countries in Washington next week.
Ahead of the meeting, Luxembourg's Prime Minister Jean-Claude
Juncker, who heads the eurogroup of finance ministers, said the
eurozone would "without a doubt" step up pressure on finance chiefs
from the G7 partners as the euro hovered around its all- time high
against the US dollar recently.
The euro weakened but remained at its record level against the
dollar earlier on Monday on speculation of the outcome of the
eurozone finance ministers meeting. It peaked at a historical high
of US$1.4284 last Monday, driven by continued concerns about the
massive US trade and budget deficits, and speculation of new US
interest rate cuts.
Some eurozone countries, led by France and Italy, stepped up
their calls for depreciation, complaining their exports are
suffering and economies are getting hurt.
They had hoped to send a stronger message to other partners,
especially the US, to curb the appreciation of the euro, which was
virtually a reflection of the continuous weakening of the
dollar.
However, in presenting their common position for the G7 meeting,
the finance ministers only agreed to say "we have noted with great
attention that the US authorities have reaffirmed that a strong
dollar is in the interest of the US economy."
The tone was obviously much softer than expected.
"We had a lengthy debate," Juncker told reporters after the
meeting which dragged into deep night of Monday due to the sharp
difference among member states.
Despite France's call, Germany, the biggest economy in the euro
zone and also a G7 member, has been in support for a strong
euro.
"I prefer a strong euro," German Finance Minister Peer
Steinbrueck told reporters on arrival for the meeting with his
eurozone counterparts, making clear his difference with France and
Italy.
The Netherlands and Austria took a similar line with
Germany.
Dutch Finance Minister Wouter Bos said "the whole idea of the
strong euro means that people have confidence" in the economy and
Austria's Wilhelm Molterer said "the ECB has our full support."
Instead, the finance ministers unexpectedly singled out China as
an easy target, pressing the emerging economy to do more to make
its currency RMB more flexible.
"In emerging economies with large and growing current account
surpluses, especially China, it is desirable that their effective
exchange rates move so that necessary adjustments will occur," they
said.
Juncker said he and President of the European Central Bank Jean-
Claude Trichet, EU Economic and Monetary Affairs Commissioner
Joaquin Almunia would lead a delegation to China for a dialogue on
macroeconomic policies before the end of this year.
On the Japanese yen, the finance ministers also expressed
concerns that it too was undervalued.
"As stated by the Japanese authorities, the Japanese economy is
on a sustainable recovery path. These developments should be
recognized by market participants and be incorporated in their
assessments of risks," they said in the statement.
"We note that the euro area is playing its role for an orderly
reduction of the imbalances by implementing structural reforms and
contributing to a rebalancing of growth," they added.
(Xinhua News Agency October 9, 2007)
