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To: yard_man who wrote (243095)	5/29/2003 5:11:43 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 436258

Policymakers' comments about rising euro Thursday May 29, 1:22 pm ET LONDON, May 29 (Reuters) - The sharp rise in the euro to record highs against the dollar this week, following gains of almost 30 percent over the past year, has heightened concerns about the economic impact of such large exchange rate shifts. ---------------------------------------------------- IRISH FINANCE MINISTER CHARLIE MCCREEVY - MAY 29 Irish Finance Minister Charlie McCreevy said the current level of the euro against the U.S. dollar was bearable for Irish exporters, but the speed of the currency's recent ascent was causing problems. He told Reuters in an interview the euro at $1.17 in the first few months of its birth had not seemed to create problems for the world economy. "So therefore the rate it's at now can be liveable, but it's the speed at which it has gone up that is causing difficulties." "But now it's at a level which I suggest is probably more realistic, or the level at which we thought it would stay when we joined (the euro)." "I think other euro members feel the same as I do that the UK would be a major player and it could only be positive for the euro if Britain was to join." ---------------------------------------------------- ECB CHIEF ECONOMIST OTMAR ISSING - MAY 28 Issing said the strengthening of the euro was natural given its previously low exchange rate. "It is absolutely clear that the slowing of inflation is linked to the euro's strengthening, and with this the monetary policy room for manoeuvre has also changed," Issing told a Finnish business daily Kauppalehti. "What we can note and what we expect, not least because of the strong euro, is the significant slowing of inflation during the next couple of years," he added. ---------------------------------------------------- IMF MANAGING DIRECTOR HORST KOEHLER - MAY 28 Koehler said major governments and central banks at some point would need to stop a rapid decline in the U.S. dollar. He declined to speculate at what price level action to stem the dollar's decline might be warranted and said some depreciation was to have been expected. "The devaluation is 16 percent in trade-weighted terms. This is within bounds and should not come as a surprise given the large U.S. current account deficit. But there is a point at which the accelerating depreciation of the dollar demands that governments and central banks act together," he said in an interview with Handlesblatt newspaper. "I will not speculate about where that point is," he added. ----------------------------------------------------- GERMAN ECONOMY MINISTER WOLFGANG CLEMENT - MAY 28 Clement said on Wednesday the country's economy could cope with the euro's current exchange rate against the dollar and he expected growth to pick up in the second half of 2003. "The euro is at its launch rate against the dollar. That's a level the German economy can and must be able to deal with. The German export industry is strong enough," Clement told journalists. Clement reaffirmed remarks made during a U.S. visit earlier this month, saying the weak dollar was due to financial markets' reading of economic fundamentals rather than to any conscious government effort. "I've been told U.S. policy is not interested in pursuing a weak dollar ... (Federal Reserve Chairman Alan) Greenspan and the U.S. Treasury Secretary (John Snow (News)) told me," Clement said. ----------------------------------------------------- ITALY INDUSTRY MINISTER ANTONIO MARZANO - MAY 28 A strong euro may not hurt Italian economic growth and could actually help Europe, Italian Industry Minister Antonio Marzano said. Asked if a strong euro risked undermining Italy's growth outlook, Marzano replied: "Not necessarily." Speaking to a group of reporters, the minister added: "A weak dollar (should) help internal demand in the United States. If this policy works then there would be a stronger pick-up in the United States and this would be advantageous (to Europe)." ----------------------------------------------------- IRISH FINANCE MINISTER CHARLIE MCCREEVY - MAY 28 Finance Minister Charlie McCreevy said the weakening of the U.S. dollar against the euro was having a particularly strong impact on exporting nations like Ireland. "For an exporting country such as ours a quick ascent in the rise of the euro makes it difficult for exporters," McCreevy said in an interview with Dublin radio station Newstalk. McCreevy said the weak dollar's impact was not all bad, as imports like petrol that are denominated in dollars become cheaper. He also said Ireland had benefited for the two years that the euro was relatively weak against the U.S. currency. "We got a boost when the currency was going in the other direction," he said. McCreevy said that with the euro's appreciation, it was all the more important for Ireland to maintain its competitive edge by keeping costs and salaries under control. ----------------------------------------------------- PORTUGAL'S PRIME MINISTER JOSE MANUEL DURAO BARROSO - MAY 27 Durao Barroso on Tuesday said reforms were more important to boosting the European economy than easing the euro currency from record levels against the dollar. Talking to journalists after a book launch, Durao Barroso recalled that Portugal's exports rose by 6 percent in the three months to February. "What that shows is that the essential problem with the Portuguese -- indeed the European -- economy, is not a problem over the euro-dollar rate but rather the existence of stimuli to reform our economy," he said. "I think that with a stronger or weaker euro, we always have to take measures within our reach, namely reforming the economy," he added. ----------------------------------------------------- EUROPEAN MONETARY AFFAIRS COMMISSIONER PEDRO SOLBES - MAY 27 Solbes said on Tuesday that the euro's recent rise had both positive and negative effects on the euro zone economy. Speaking to a French parliamentary committee hearing, Solbes said that while appreciation of the currency could initially have a negative impact on growth, it could subsequently help growth by lowering the cost of imports. "There are positive and negative elements," he said of the euro's rise to above $1.19 against the dollar. ----------------------------------------------------- SPAIN'S ECONOMY MINISTER RODRIGO RATO - MAY 27 Rato said on Tuesday he believed the euro's strength would continue with small changes in the coming months. "This strength of the euro will be maintained, with not very significant fluctuations, for the coming months," Rato told reporters after a prize-giving ceremony in Madrid. Rato said the important thing was for the euro to be a stable currency and said recent changes in the euro/dollar rate were closely linked to imbalances in the U.S. economy. ----------------------------------------------------- FRANCE'S TRADE MINISTER FRANCOIS LOOS - MAY 27 The euro's strength is already hurting some 10 percent of French exporters and the proportion could rise further if the currency continues to appreciate, Loos said in an interview. "For the moment, the euro's strong level is problematic for around 10 percent of exporting companies. But the more its value rises, the more this proportion risks rising," Loos said in an interview with the edition of Le Monde released on Tuesday. ----------------------------------------------------- DEPUTY GOVERNOR OF AUSTRIAN CENTRAL BANK GERTRUDE TUMPEL-GUGERELL - MAY 26 Designated European Central Bank executive board member Gertrude Tumpel-Gugerell said on Monday the current strength of the euro exchange rate was "bearable" for the euro zone economy. "I think the current level of the euro is bearable," the deputry governor of the Austrian central bank told Austrian radio ORF. ----------------------------------------------------- FRENCH GOVT CHIEF SPOKESMAN JEAN-FRANCOIS COPE - MAY 26 The strong euro has a beneficial effect on euro zone economies, notably by keeping a lid on import prices, the chief spokesman of the French government was quoted as saying on Monday. Jean-Francois Cope told Le Figaro newspaper he found the debate about whether the strong euro and its potentially negative impact on exports "out of touch with reality". "We should remember that the strong euro also has positive effects. In particular on the price of imports. Its appreciation spared us from a surge in oil prices before the Iraq conflict. "Moreover for a country embarking on structural reforms, having a strong currency is an advantage," he added of France's current bid to reform its state pension system and bring its public deficit under control.