EU says euro appreciation taking only modest toll on exports
Thursday, 5 July 2007
BRUSSELS, July 4 (Xinhua): The euro appreciation has taken only a modest toll on export growth, the European Commission said yesterday as the single currency hovered around its record high.
The European Union's executive arm said despite the euro's rise, some eurozone countries have performed much better than others sharing the same currency, an evidence that the exchange rate plays only a limited role in the export performance of the individual countries.
"The causes for a lackluster trade performance of some members must, therefore, be found elsewhere and particularly in domestic wage and productivity developments," the commission said, rebuffing France's call for a weaker euro.
The newly elected French president Nicolas Sarkozy reiterated Monday that the euro overvalued, blaming the recent rise of the euro against Japanese yen and U.S. dollar for lagging French exports.
On Tuesday, the euro climbed to 1.3638 dollars in European trade, close to its record high against the U.S. currency in April, while the yen fell to a record low of 167.18 per euro before trading in London.
But the European Commission said that on average, the euro appreciation remains relatively modest, at about four per cent in nominal terms since the beginning of 2006.
"The experience with the previous period of appreciation, in the first half of this decade, shows that fluctuations in the real exchange rate have a relatively modest impact on the euro area's export performance," the commission said.
According to the commission, it was estimated that between 2001 and 2006, exchange rate fluctuations curbed annual growth in eurozone exports by 0.6 per centage point, which is small relative to the five per cent average annual growth in the exports over the period.
The European Union's executive arm said despite the euro's rise, some eurozone countries have performed much better than others sharing the same currency, an evidence that the exchange rate plays only a limited role in the export performance of the individual countries.
"The causes for a lackluster trade performance of some members must, therefore, be found elsewhere and particularly in domestic wage and productivity developments," the commission said, rebuffing France's call for a weaker euro.
The newly elected French president Nicolas Sarkozy reiterated Monday that the euro overvalued, blaming the recent rise of the euro against Japanese yen and U.S. dollar for lagging French exports.
On Tuesday, the euro climbed to 1.3638 dollars in European trade, close to its record high against the U.S. currency in April, while the yen fell to a record low of 167.18 per euro before trading in London.
But the European Commission said that on average, the euro appreciation remains relatively modest, at about four per cent in nominal terms since the beginning of 2006.
"The experience with the previous period of appreciation, in the first half of this decade, shows that fluctuations in the real exchange rate have a relatively modest impact on the euro area's export performance," the commission said.
According to the commission, it was estimated that between 2001 and 2006, exchange rate fluctuations curbed annual growth in eurozone exports by 0.6 per centage point, which is small relative to the five per cent average annual growth in the exports over the period.