Strengthening euro worries Ecofin ministers

Euro zone finance ministers are expected to unanimously express their concern about the continuing raise of the euro on currency…

Euro zone finance ministers are expected to unanimously express their concern about the continuing raise of the euro on currency markets.

Ecofin ministers are due to meet informally at 6 p.m. this evening in Brussels, and while the euro's current rate is seen as sustainable further rises are seen as a serious risk to member state economies.

The ministers' session is the last before the Group of Seven (G7) finance ministers meet on February 6th and 7th.

An official from EU president Ireland today said a formal statement following this evening's meeting is not anticipated but a statement said:

READ MORE

"The Minister will present the Programme of the Irish Presidency in the EcoFin area. The main business of the meeting otherwise will be the examination of the programmes submitted by Denmark, Austria, Finland and Sweden under the Stability and Growth Pact."

But ministers are expected to clarify their position in relation to the policy of maintaining a strong and stable euro.

"The language being used ... by the central bank and the Eurogroup on exchange rates has changed slightly already since the beginning of the year, giving more emphasis to the dangers linked to volatility," said the European Commission's spokesman on economic affairs, Mr Gerassimos Thomas.

"The problem of volatility, the problem of the strong euro is evident to everybody," the EU presidency source said.

Nuances that stress objections to big currency swings should win backing from the European Central Bank, which will be represented at the meeting by its president, Mr Jean-Claude Trichet, who last week said "brutal" currency swings were unwelcome and inappropriate.

A stronger euro erodes export competitiveness and is therefore a politically sensitive issue at a time when the eurozone economy is only now showing signs of getting off the ground.

For example, French corporate and combat jetmaker Dassault Aviation said it had lost 25 per cent of its competitiveness in the military business compared with last year because of dollar weakness.

Additional reporting: Agencies