Thursday, 22 November 2007

Trichet Opposes Brutal Currency Moves

"Excessive volatility and disorderly movements on currency markets play against global growth" Trichet said in Paris, addressing a panel appointed by French President Nicolas Sarkozy charged with spurring economic growth. "I am against brutal, quick and, as I have said, brutal moves."

The euro, which rose to a record $1.4873 earlier today, has appreciated more than 10 percent since mid-August, eroding the competitiveness of European exports. The European Commission this month cut its forecast for euro-area growth next year to 2.2 percent from 2.5 percent.

Trichet has added "brutal"to his rhetorical arsenal this month for the first time since a euro rally in 2004, suggesting growing concern that the currency's appreciation may undermine Europe's economic expansion. He's traveling to China next week with Luxembourg Prime Minister Jean-Claude Juncker and European Union Monetary Affairs Commissioner Joaquin Almunia to press officials there to let their currency strengthen.

While the yuan has risen about 5 percent against the dollar this year, it has weakened by almost 7 percent against the euro, raising the cost of European exports. The euro has also strengthened against the Japanese yen.

"We have a position with our U.S., Japanese, Canadian friends on currencies of emerging countries and notably China, which in our eye should accelerate its appreciation,"Trichet said today, echoing the statement of the Group of Seven nations.

"I also noted that a certain number of officials in the Japanese government and finance ministry have said that the markets should progressively acknowledge that the Japanese economy is on the right track,"Trichet said.

The euro was traded at $1.4852 at 7:21 PM in Paris.