Brussels, 23/04/2008 (Agence Europe) - The continued rise in the value of the euro, which, on Tuesday 22 April, reached the historic peak of $1.60, is making the president of the Eurogroup very unhappy. “I don't like the way things are developing,” said Jean-Claude Juncker on Wednesday 23 April. Regretting that the recent G7 press release on exchange rates had not apparently been understood by the markets (see EUROPE 9642), he pointed out that, “It was not the intention of the G7 to lead to the results we are noting today”. On the sidelines of a conference in Luxemburg, he told journalists once more that Washington's message was “crystal clear” and that “excessive exchange rate volatility is undesirable for economic growth”. Financial markets probably “should pay more attention to developments to come and should be concentrating less on short-term information,” he went on to say.
These comments come the day after those from Governor of the Bank of France Christian Noyer on interest levels. He suggested that the next change from the ECB could be an increase. That helped push the single currency up against the dollar. In the Wall Street Journal of 23 April, Noyer went back on his comments of the previous day (which, he said, had been misconstrued by the financial markets), stressing that “movements (of interest rates) can go both ways”. He went on, “I would never engage in a discussion about the future path of interest rates, simply because nobody knows. It would be dangerous to make predictions in either direction”. While the Frenchman may be trying to change tack, his Luxemburg colleague on the ECB Governing Council Yves Mersch also said it was difficult to conceive of lowering rates in the current context (euro area inflation was 3.6% in March). “I am surprised certain market analysts are contemplating an option that is not called for at all in the current environment,” he said in an interview in the Financial Times Deutschland on 22 April. The question of a possible rates rise is one “we have to ask ourselves every month,” he stated. (A.B.)