One of the German government's economic advisers yesterday said that the euro could fall below parity with the dollar, but a top Bundesbank official said the decline in the single currency was no cause for concern. Mr Horst Siebert, one of the government's "five wise men" panel of independent economic advisers, said the euro might trade at 90 cents to the US dollar.
Mr Siebert's comments immediately placed the already beleaguered single currency under renewed pressure. It fell to $1.0130, compared with the reference value of $1.0183 fixed by the European Central Bank (ECB) on Tuesday. At close of business in Dublin yesterday, the euro was trading at $1.0216.
In a separate interview, Bundesbank central council member, Mr Klaus-Dieter Kuhbacher, insisted that the current weakness of the euro against the US dollar was no cause for concern.
Forex market traders in Berlin said the markets were now targeting parity with the dollar and it would only be a matter of time before the euro fell to $1. Mr Siebert said the euro's decline could become dangerous if higher import prices led to an acceleration in inflation.
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