Juncker rejects weaker euro call

 

Eurogroup chairman Jean-Claude Juncker dismissed today French calls for a weaker euro to help exports, saying the exchange rate was not causing any harm yet.

French Prime Minister Dominique de Villepin last week told sub-contractors at the troubled Airbus aircraft maker that the euro's current levels were hurting exports and called for a European exchange rate strategy to remedy that.

But Mr Juncker, who chairs the monthly meetings of the euro zone's 12 finance ministers, said the single currency's strength was not a problem.

The euro rose to a three-month high above $1.2900 today, up from $1.1840 at the end of 2005.

"I don't see a situation, as far as the existing situation is concerned, where we already start to suffer from an exchange rate which would be harmful," Mr Juncker told reporters.

"I don't think that we are yet there," he said. Mr Villepin's comments were echoed by French President Jacques Chirac, who said last Thursday other euro zone countries shared French concerns about the euro's strength.

Economic growth stagnated in France, the euro zone's second biggest economy, during the third quarter - bad news for the government in the middle of a presidential election campaign.

But the European Commission warned today against blaming the euro for domestic economic problems. "Politicians need to ... at the very least, think twice before using (the euro) as a scapegoat for an economy's problems," the European Union executive said in a statement.

France has blamed the euro's strength on the European Central Bank's interest rate policy, and said the bank should not be allowed to act alone on exchange rates.

Both Mr Juncker and Economic and Monetary Affairs Commissioner Joaquin Almunia, speaking separately to journalists, said that although the Eurogroup's dialogue with the ECB could be improved, the bank's independence should not be questioned.