Schröder Calls for Action on Dollar Slide | Business| Economy and finance news from a German perspective | DW | 20.11.2004
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Schröder Calls for Action on Dollar Slide

German Chancellor Gerhard Schröder on Saturday called on the European Central Bank and other central banks to act on the dollar's slide, saying the euro's rise against the US currency was "worrying."


These dollars won't buy those euros

"The European Central Bank and also other central banks should think about doing something themselves, in respect of their independence," Schröder told reporters on the sidelines of a Group of 20 meeting of finance chiefs in the German capital.

Asked whether the United States should try to rein in the dollar's descent, because the European Union had made efforts on easing Iraqi debt, the chancellor replied that the two issues could not be linked.

"But the euro/dollar evolution is very worrying," he said. "The reason for that is clearly the twin deficits in the US and clearly a partnership means that you have to do something about it."

The strength of the euro is weighing on EU exports by making them more expensive, threatening the feeble economic recovery of the 12-state eurozone.

US unfair?

Schröder wichtig

German Chancellor Gerhard Schröder

Schröder (photo) questioned the fairness of US suggestions that the eurozone should further pursue economic reforms to stimulate growth and weaken the euro.

"It's difficult to ask Europeans to implement structural reforms -- which they are already doing, and at the same time not put a lot of focus on its own economic issues," he said.

Schröder also said that more cooperation with Asian countries, particularly with China and Japan, was also necessary on exchange rate issues.

European policy-makers are concerned that the strength of the euro will undermine Europe's fragile, export-led economic recovery, but central bankers have so far shown little inclination to intervene in currency markets to halt the dollar's slide.

A source close to the German government said Saturday that none of the participants at the meeting had declared support for intervention in the forex markets.

The euro rose to a record high of $1.3074 Wednesday. It neared that high again Friday after US Federal Reserve Chairman Alan Greenspan warned that the size of the US deficits will put investors off dollar-denominated assets.

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