EU Ministers United on Euro Level
Ministers from the 12 countries that share the euro have issued a joint statement expressing concern about the continued high level of the currency against the dollar.
As the euro reached new highs against the US currency and approached the $1.35 level, ministers described the recent currency moves as "an unwelcome development" and stated, "all major countries and economic areas must play their part more actively in reducing global imbalances." A strong euro against the dollar makes exports from the euro zone to the US more expensive and is likely to dampen growth in the euro zone’s export-driven economy.
The President of the European Central Bank, Jean-Claude Trichet called on the US to play their part in stemming the decline of the dollar. In an unusual appearance at the post-meeting press briefing, Trichet said that "we all have homework to do … that is true on both sides of the Atlantic." Austrian Finance Minister Karl-Heinz Grasser said it was "unacceptable that Europe is paying the bill for major imbalances in the US." The pleas have so far fallen on deaf ears in Washington, with the administration emphasizing that the EU needs to engage in structural reform to boost growth. But the rhetoric from Europe seems to have had some impact on the markets, with the euro gaining slightly in overnight trade as traders took the statement to be a further hint that European intervention to strengthen the dollar is possible.