France’s euro calls rejected by ministers

BRUSSELS - Reuters

France’s Finance Minister Pierre Moscovici and Spain’s Economy Minister Luis de Guindos (L) attend an euro zone finance ministers meeting. REUTERS photo

France called on Feb. 11 for coordinated action by the world’s major economies to counter the strength of the euro and avoid damaging an economic recovery, but Europe’s finance ministers said it was up to markets to decide the currency’s value.

French President Francois Hollande last week raised the possibility of political interference in exchange rate policy when he called for a medium-term target for the euro’s value, a move to counter its recent appreciation.

France’s Finance Minister Pierre Moscovici reiterated Hollande’s message to his euro zone peers in Brussels and urged “strong action”, but appeared to win little support. Euro zone ministers said the issue should be discussed by finance ministers and central bankers from the world’s 20 biggest economies in Moscow on Friday and Saturday.

The strengthening euro is a source of tension between France andGermany, the two countries at the heart of European integration, because Berlin refuses to countenance governments’ involvement in managing exchange rates.

The euro has risen about 13 percent against the dollar since touching $1.21 in July last year, although it has come off recent highs since European Central Bank President Mario Draghi indulged in some gentle verbal intervention on Feb. 7.

Cyprus bailout

The European Ministers also discussed about Greek Cyprus during the meeting but Greek Cypriot finance minister drew no clear support from his euro zone peers for his refusal to impose losses on bank depositors as part of the country’s bailout programme.

Greek Cyprus needs some 17 billion euros in a loan programme from the euro zone to recapitalise its banks, which were hit by the Greek sovereign debt restructuring, and finance government spending over the next three years