EU finance chiefs on guard over euro strength, market turmoil

FE Team | Published: September 16, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

PORTO, Portugal, Sept 15 (AFP): EU finance ministers and central bankers vowed Friday to be on guard over the strength of the euro and financial market turmoil, while voicing confidence that the economic impact would be limited.
The 13 countries sharing the euro will keep a close eye on their currency's record-breaking strength, although economic growth should hold up, the bloc's finance chiefs concluded at a meeting in Porto, northern Portugal.
"We are following very closely all developments that can occur" on currency markets, said Luxembourg Finance Minister Jean-Claude Juncker, who is the chairman of regular meetings of his Eurozone counterparts.
Although the euro hit an all-time high Thursday of 1.3927 dollars, finance ministers and central bankers were careful not to stray from well-worn Group of Seven (G7) statements rather than push the panic button about the euro's strength.
"Excessive volatility and disorderly movements in exchange rates is undesirable for economic growth," European Central Bank president Jean-Claude Trichet said, echoing the conclusions of many past G7 meetings.
A strong euro makes exports from the Eurozone less competitive on international markets, which has been a major source of concern mainly for French politicians struggling to boost their flagging growth.
Despite the surging strength of the euro, Juncker painted a mostly upbeat picture of the Eurozone's economic health, although he warned that risks to the outlook were growing due to recent turmoil on financial markets.
"We think that the recent developments on the financial markets will have an impact, but a light impact, on the outlook for growth in 2007 toward the end of the year," he said.
"We believe that economic growth will remain sufficiently robust so that in 2008 we will not see a sharp downward revision," added Juncker.
The European Commission marginally lowered its Eurozone growth expectations this week, forecasting that the bloc's economy would grow 2.5 per cent rather than the 2.6 per cent previously estimated.