European Central Bank governing council member Mr Christian Noyer said today monetary authorities remained vigilant about the level of the euro, but there was no need to dramatise its strength against the dollar.
Mr Noyer, who is also governor of the Bank of France, said foreign exchange levels were just one of the factors affecting monetary policy for the 12-nation euro zone and intervention on the currency markets was always an option.
"I think one should not overdramatise," he told French television station France 2. "What is true is that very abrupt movements between large currencies are never very good.
"That is why we have said and insisted in recent days - (ECB chief) Jean-Claude Trichet said it several times - that excess volatility, sudden movements are not good for global growth," Mr Noyer added.
"I think the message of stability has been heard and that market players have taken it into account in the last few days. We will see what happens, we remain attentive and vigilant to all developments," he said.
"As far as intervention is concerned, it is always something that can be used but we never announce it ahead of time."
The euro paused against the dollar today after a chorus of top European officials spoke out against the rapid rise in the single currency. It stood at around $1.2730, down slightly from late New York levels.
Asked to comment on the European Commission's decision to mount a legal challenge to overturn a decision by EU finance ministers to suspend the bloc's budget rules for France and Germany, he said budget control was in France's interest too.
"This issue of a progressive return to budget equilibrium should not be viewed as a clash between Brussels and France," he said. "It's really in our interest above anything else."
France expects in 2004 to bust the deficit ceiling of three per cent of gross domestic product (GDP) set out in the European Union's Stability and Growth Pact for the third year in a row.
It has promised to bring its shortfall down to 2.9 per cent of GDP in 2005, in the Commission's view still dangerously close to the upper limit of three per cent.