BRUSSELS (AFP) -
European finance ministers expressed concern at
"excess volatility" in currency rates in talks
that also took in the vexed question of reforms to
the eurozoneís tattered budget rules.
Ministers from the
12-nation eurozone met as evidence accumulates
that the euroís record-breaking appreciation
against the dollar is starting to undermine the
areaís already struggling economy.
"As far as the
exchange rate is concerned, ministers agreed that
excess volatility and disorderly movements in
exchange rates are undesirable for economic
growth," Dutch Finance Minister Gerrit Zalm told a
"In this context,
recent sharp moves of exchange rates are
unwelcome," the eurozoneís current chairman added,
echoing a statement by the Group of Seven (G7)
nations in February.
The euro rose above
1.30 dollars last week for the first time since it
began trading on foreign exchange markets in
The impact has
already been seen with provisional figures on
Friday showing that eurozone growth was up a mere
0.3 percent in the third quarter from the previous
The dollar firmed a
touch on Monday after US Treasury Secretary John
Snow deflected suggestions of benign neglect of
the currency by the US administration, saying
Washington backed a strong dollar.
"Currency values are
best set in open and competitive exchange
markets," Snow added in Dublin.
Zalm said in
response: "The US policy on a strong dollar would
be helpful to prevent sharp movements in exchange
rates, which are unwelcome."
But EU economic
commissioner Joaquin Almunia blamed "longstanding
imbalances in the US" for eroding the dollarís
worth. The United States is running huge current
account and budget deficits.
European Central Bank
president Jean-Claude Trichet has already
expressed alarm at the "brutal" rise of the euro,
which threatens to strangle export-led growth in
But Zalm, pressed on
what action the eurozone countries might take,
said: "We didnít ask the ECB anything. As a
central bank, itís never wise to promise action or
to promise inactivity."
While the currency
markets provide cause for concern, the eurozone
ministers acknowledged better news on the oil
markets, after a slippage in prices from recent
But in another
warning to France, which has pressed ahead with
unilateral measures to benefit sectors such as
truckers hardest hit by the oil rally, the
ministers said "distortionary policy
interventions" should be avoided.
And where "short-term
targeted measures are taken to alleviate the
impact of higher oil prices on the poorer sections
of the population, they should not compromise the
overall policy framework agreed by the euro
group", they added.
The ministers held
another round of debate on what, if any, reforms
should be enacted to the Stability and Growth
Pact, the eurozoneís beleaguered fiscal rulebook.
the European Commissionís desire to keep serial
budget miscreants such as France and Germany in
line, said "we need an agreement to which we can