DJ ECB's Weber: Sharp Currency Fluctuations Not Helpful
WASHINGTON (Dow Jones)--Sharp currency fluctuations "are not helpful," said European Central Bank governing council member Axel Weber on Friday, noting the Group of Seven leading industrial nations changed the language about exchange rates in its most recent communique.
Speaking to reporters following the G7 meeting Weber also said there is reason to be "concerned" about the possible implications of recent sharp currency swings for the economy.
In the communique, the G7 group of finance ministers and central bankers warned that since its last meeting, "there have been at times sharp fluctuations in major currencies."
The G7 said in its statement that "we are concerned about their possible implications for economic and financial stability. We continue to monitor exchange markets closely, and cooperate as appropriate."
"You can see that there has been an evolution in our language," Weber said, adding that the G7 not only calls on China to increase the flexibility of its currency but also believes that "sharp, excessive fluctations (in major currencies)... aren't helpful."
The euro-zone's single currency has risen sharply against the dollar in recent months, up about 17% against the U.S. dollar over the past year, fueling concern that it would hurt exports in the 15 countries that use the euro.
Weber, who is president of the Deutsche Bundesbank, said that sentiment about financial markets remains volatile but that he sees the first signs that there is some improvement in the markets.
He also said that recent action taken in the U.S. should help to stabilize the market in the second half of the year.
Commenting on the potential losses from write-downs of bad debt triggered by the global financial crisis, Weber said that he is more cautious than the International Monetary Fund, which earlier this week estimated the toll could reach as much as $1 trillion. Weber said he estimates that the global write-downs reached $225 billion by the end of the first quarter and some $30 billion in Germany during that period.
Speaking at the same briefing, German Finance Minister Peer Steinbrueck called the IMF's estimate "absurd."
He also said that the issue of compensation packages for company executives is a critical point on his agenda, but he said he can't imagine any legal measures that would deal with overly generous pay. Instead, he called on companies to adopt a self-regulating approach on the issue.
The G7 includes Canada, France, Germany, Italy, Japan, the U.K. and the U.S.
-By Andrea Thomas, Dow Jones Newswires; +49-30-2888-410; andrea.thomas@dowjones.com |
