BRUSSELS — Concern over the euro came to the fore on Monday ahead of a meeting of finance ministers of the countries using the currency. But this time, with the union’s recession continuing, the topic was the strength of the euro rather than its many weaknesses.
As confidence has grown that the European Union will be able to manage its sovereign debt crisis, the euro has made significant gains against the dollar and other foreign currencies. That is making it more expensive for Europe’s trading partners to buy its exports and could hamper growth.
On Monday, France, which traditionally favors market intervention, renewed its calls for remedial steps, like establishing a target level for the euro’s value.
Exchange rates need “to reflect the economic fundamentals of our economies of the euro zone,” Pierre Moscovici, the French finance minister, said ahead of the regular monthly meeting of so-called Eurogroup ministers. “Exchange rates should not become subjected to moods or speculation.”
Mr. Moscovici said he would make the case for coordinated action to keep a lid on the value of the euro in order to present the plan, possibly at a meeting of finance ministers and central bankers of the Group of 20 nations to be held in Moscow at the end of the week.
The euro was trading at $1.339 on Monday after falling to the low $1.20s in 2012.
But some ministers suggested intervention would be wrongheaded.
“This is mainly decided by the market,” Maria Fekter, the Austrian finance minister, said in response to a question on the euro strength as she arrived at the meeting. “I find an artificial weakening unnecessary.”
The French position is also likely to irritate Germany, where officials suggested last week that intervention on exchange rate markets was a poor way to improve competitiveness.
The strong euro means some European exports, like cars and wine, become more expensive abroad, putting European producers at a disadvantage against foreign competitors. But there are also positive effects. Imports, particularly oil, become less expensive for Europeans, which helps stimulate the economy.
Mario Draghi, the president of the European Central Bank, warned last week that the strength of the euro could weigh on the ability of Europe to pull out of its economic doldrums. Those comments sent the euro down sharply against the dollar and yen.
Jeroen Dijsselbloem, the president of the Eurogroup who oversees the agenda for the monthly meetings, said that the strength of the euro could be one of the main subjects discussed on Monday evening. But he also said the meeting was likely to be a short one in order to allow ministers to attend a farewell dinner for Jean Claude Juncker, the prime minister of Luxembourg who stepped down last month as president of the Eurogroup.
How to handle a bailout for Cyprus was also likely to be discussed by ministers on Monday evening.
Among the potentially explosive issues is whether to force depositors in Cyprus, including wealthy Russians, to take losses on their holdings to help reduce the burden of recapitalizing and restructuring Cypriot banks.
But Vassos Shiarly, the Cypriot finance minister, bluntly rejected that scenario on Monday.
“I would say that the bail-in of depositors is a grossly exaggerated possibility,” Mr. Shiarly said. “We will not accept it under any circumstances.”
No agreement with the Cypriot government in Nicosia is expected until after the departure of President Demetris Christofias, a Communist, who will not be running in elections scheduled for later this month.
International creditors want to wait to negotiate a rescue program with the winner, who is likely to be Nicos Anastasiades of the Democratic Rally, a center-right party.
Euro’s Strength on Agenda for Finance Ministers
This article
Euro’s Strength on Agenda for Finance Ministers
can be opened in url
http://accessnewster.blogspot.com/2013/02/euros-strength-on-agenda-for-finance.html
Euro’s Strength on Agenda for Finance Ministers
