European Central Bank Executive Board Member Lorenzo Bini Smaghi signaled he wasn't concerned about the high value of the euro, saying it reflects the strength of the euro-zone economy just as the dollar reflects weakness in the U.S. economy.
"The weakness of the dollar reflects the weakness of the American economy," Bini Smaghi told state television Rai 1, when asked about the implications of the value of the currency. The dollar hit a record low versus the euro and a six-week low against the yen in Asia Monday, hurt by lingering speculation that problems in the U.S. subprime loan market could damage the broader economy. During the Asian session, selling by U.S. investment banks and Singapore and Hong Kong players pushed the euro to a fresh all-time high of $1.3846. Friday, buoyed by weaker-than-expected U.S. retail sales, the euro surged to $1.3815, the highest it has been since the 13-nation currency began trading in 1999. Some euro-zone policymakers worry that the single currency's strength could curb the area's economic recovery. French President Nicolas Sarkozy has frequently complained about the strength of the euro, arguing that it puts European exporters at a disadvantage against their competitors in the U.S., China and Japan. Sarkozy has argued that euro-zone finance ministers should define a common exchange-rate policy, a move that would constrain the independence of the European Central Bank. But the ECB has brushed aside the euro's recent appreciation, saying it's focused on inflation pressures while signaling that interest rates could go higher still. |
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