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To: TobagoJack who wrote (33606)	5/12/2003 11:06:49 PM
From: Box-By-The-Riviera™	Respond to of 74559

thanks.

To: TobagoJack who wrote (33606)	5/13/2003 12:59:36 AM
From: elmatador	Respond to of 74559

Strong euro good for economy, say EU ministers By George Parker in Brussels and Tony Major and Uta Harnischfeger in Frankfurt Published: May 12 2003 21:37 \| Last Updated: May 13 2003 1:31 Finance ministers from Europe's single currency area on Monday night insisted that a strong euro was good for the EU and for the global economy. The statement came after the euro climbed within sight of its January 1999 launch rate of $1.1750, sparking renewed concern about the eurozone's competitiveness. The single currency briefly touched four-year highs above $1.16, fuelled by comments from John Snow, US Treasury secretary, that the dollar's decline was helping US exporters. But the 12 eurozone finance ministers, meeting in Brussels, said the rise in the euro helped to control inflation in the EU and forced exporters to become more competitive. Nikos Christodoulakis, the Greek chairman of Monday night's eurogroup meeting, said: "Strength is very useful because it reflects the economic fundamentals which pertain in the European economy." Pedro Solbes, EU monetary affairs commissioner, said volatility was a problem, but added: "On balance, a strong euro is in the interests of the euro area and the global economy." However some finance ministers think that the European Central Bank should take advantage of the impact of a rising euro to cut interest rates. Didier Reynders, Belgian finance minister, hoped a move could be made within weeks. Market economists said the currency's rise had neutralised recent interest rate reductions by the ECB and would cut growth substantially over the next two years, adding urgency to the case for a looser monetary stance. One diplomat said there was now "clear concern about the gap between US and eurozone interest rates", which had helped fuel the euro's relative strength. "There are grounds to wonder . . . about its impact on the economy," he added. So far most public disquiet has been voiced by European companies, including carmaker Volkswagen, consumer group Henkel and tyremaker Michelin. They blame the euro's strength for hurting first-quarter profits. Linde, the German gases group, warned on Monday that "a massive currency impact" was making it harder to achieve the goal of "noticeably improving" its operating profits in 2003. The ECB's policymakers appear relaxed about the euro's rise. Last week Wim Duisenberg, the bank's president, said there was nothing excessive about the current exchange rate, which reflected fundamentals. The ECB resisted heavy pressure to cut rates, insisting monetary policy was still conducive to a gradual strengthening of the eurozone economy over the course of the year. But economists said the return of the euro to its long-term average value after a long period of undervaluation was undermining growth prospects. Merrill Lynch economists said it could cut growth by 1 per cent over the next two years. The currency's rise has also significantly tightened monetary conditions in the eurozone, more than offsetting the 75 basis points of easing since December. The central bank now needs to cut rates by at least 50 basis points to keep its stance unchanged.