Finance & Business World

Luxembourg’s Jean-Claude Juncker, who heads the group of euro-area finance ministers, warned that further gains by the European currency could threaten the region’s recovery from the deepest recession in six decades.

“I’m not too worried about the euro’s current level,” Juncker told a press conference today in Luxembourg, where he serves as premier and Treasury minister. “However, if the euro were to continue in the direction it did in the last few weeks, there’s a risk that there’ll be an exchange rate that could slow down economic recovery in Europe.”

The euro has risen 15 percent against the dollar in the past seven months, eroding export returns for European companies just as the region is starting to recover from the global slump. European Central Bank President Jean-Claude Trichet yesterday said it is “extremely important” that U.S. authorities pursue policies supporting a strong dollar and called excessive currency volatility “an enemy” of global economic stability.

The euro this week reached a 14-month peak against the dollar and Goldman Sachs Group Inc. yesterday projected that the European currency will advance to $1.55 in the next three to six months before retreating to $1.35 a year from now. The euro was down 0.4 percent at $1.4890 at 6:04 p.m. in London today, still up more than 10 percent in the past 12 months.

“I could become concerned at a certain juncture” in the euro’s rate against the dollar, Juncker told journalists today. “Don’t ask me where this juncture is exactly.” Juncker said the euro-area finance ministers will discuss the currencies at their next regular meeting, on Oct. 19 in Luxembourg.

Monday’s Meeting

Juncker said he “would suppose that in the course of Monday’s meeting we’ll address the subject together with the president of the European Central Bank.” The ministers also discussed the euro at their previous meeting, two weeks ago in Gothenburg, Sweden.

“We’ll tell you after the meeting if there’s something new to be said, a kind of extension to the normal poem,” Juncker said. “But I guess the poem will stay as the poem was,” adding that “we don’t like excessive volatility in exchange rates and disorderly movements.”

That echoed the view of Group of Seven finance chiefs, who met in Istanbul on Oct. 3. “Excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability,” the G-7 ministers and central bankers said in a statement after the meeting, repeating language they used in April.

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