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To: Haim R. Branisteanu who wrote (4148)	12/30/2003 8:07:26 AM
From: Haim R. Branisteanu	Respond to of 110194

G7 finance ministers to discuss USD weakness at Florida meeting in February. Source also says EURUSD clearly above $1.20 is not in Europe's interest, and puts the "pain barrier" at 1.30 Bundesbank's Reckers Says Euro Appreciation Is `Very Speedy' Dec. 30 (Bloomberg) -- Bundesbank board member Hans Reckers said the euro's appreciation has been ``very speedy'' and merits increased observance, suggesting central bankers are growing uneasy about the currency's gains against the dollar. ``The speed of the change gives reason for heightened attention'' by policy makers, Reckers said in a telephone interview with Bloomberg News. He advises Ernst Welteke, one of the European Central Bank's 18 interest rate-setters. The euro has gained 19 percent against the dollar this year and rose to $1.2510 yesterday, the highest since its inception in 1999. The increase eroded third-quarter profit at exporters including Volkswagen AG and BASF AG by raising the cost of their goods overseas and cutting the value of U.S. earnings. The Bundesbank, which used to effectively set interest rates for Europe before the euro's start, said in its December monthly report that the dollar's decline ``underlines the risks'' attached to Europe's economic recovery. Reckers's remarks echo those of ECB council members Arnout Wellink and Guy Quaden. Belgian central bank governor Quaden said in an interview with Belgian daily Le Soir published Dec. 26 he doesn't ``wish to see an even stronger euro.'' Welteke, the Bundesbank's president, said in an interview with Bloomberg News on Dec. 19 the effect of euro's gain on companies is being ``over-estimated'' after a report from the Ifo institute showed German business confidence rose to the highest in almost three years in December. Inflation Goal The single currency's gains help rein in inflation in the dozen nations sharing the euro by keeping the cost of imports down, Reckers also said. ``I'm not concerned about the current level of the euro,'' Reckers said. It ``is in line with the long-term average and contributes to monetary stability. The degree of monetary stability in the euro zone is a success story.'' The region's inflation rate rose to 2.2 percent in November from 2.1 percent in the previous month. The ECB aims to keep the rate below and close to 2 percent. In Germany, Europe's largest economy, inflation was at 1.3 percent that month, the second- lowest in the euro region, according to European Union figures. Reckers also said that interest rates in the euro zone, at the lowest for any euro country in more than half a century, are ``appropriate.'' The ECB has left its main refinancing rate unchanged at 2 percent since June, after seven cuts since 2001. As a member of the Bundesbank's board, Reckers has no say in European interest rates, though he discusses monetary policy with Welteke, who helps set rates on the ECB's governing council. Last Updated: December 30, 2003 07:43 EST