Schroeder urges ECB action over strong euro

German Chancellor Gerhard Schroeder has made a veiled call for the European Central Bank (ECB) to intervene in the currency markets…

German Chancellor Gerhard Schroeder has made a veiled call for the European Central Bank (ECB) to intervene in the currency markets to reduce the value of the euro and help European exports.

In an interview in today's edition of the Financial Times, he said: "I assume the intelligent people in the leadership of the ECB discuss the question every day of whether they have done enough in the context of the dollar/euro exchange rate to maintain the competitiveness of exports from Europe".

But European Central Bank Chief Economist Mr Otmar Issing said today that export competitiveness for European companies does not solely dependent on a favourable exchange rate.

Mr Schroeder's action call came hours after the ECB held its benchmark interest rate at 2 per cent. The bank has not intervened in the currency markets for more than two years.

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Mr Schroeder pinned part of the blame for Germany's economic malaise on the strong euro, saying it was hitting the country's exporters and hindering growth.

ECB president Mr Wim Duisenberg said after the rate decision the bank had already made a "significant" contribution to fostering economic growth with recent cuts, and urged Europe's leaders to deliver necessary reforms.

Criticising policymakers for their "lack of ambition", Mr Duisenberg said they had to press ahead with overhauling pensions, health and labour markets and stick to the European Union's budget deficit rules.

The ECB, holding rates steady yesterday, said it expected to keep its policy stance unchanged for a considerable time as the worst of the economic downturn may be over.