BRUSSELS (MNI) – Finance ministers from the 16 countries that share
the Euro shrugged off questions about the level of the single currency
as they arrived for a meeting in Luxembourg on Monday.

Late Friday the euro broke below $1.20 for the first time since
March 2006, having shed around 16% of its value against the dollar since
the beginning of the year.

“I am not concerned about the existing level of the euro. I am
concerned about the abruptness of the change,” Jean-Claude Juncker,
Luxembourg Prime Minister and chair of the EMU finance ministers’ group
(the Eurogroup), told reporters as he arrived for the meeting.

European Commissioner for Economic and Monetary Affairs, Olli Rehn,
said: “I concur with Jean-Claude Juncker that it is the pace of
evolution [of the exchange rate] and not the level that is of concern.”

High debt levels in some member states, extreme market turbulence
and politically charged infighting, have put the currency union under
great strain in recent weeks, pressuring the euro.

Even after plans to shore up market confidence with a E750 billion
bail out package were revealed last month, financial markets have
remained wary about the long-term sustainability of the Eurozone and the
ability of the 16 member states to reduce their debt burdens while
producing sustainable growth after the recession.

“What we do see is that the present exchange rate of the euro is at
about its historic average. Other economies in the world have a higher
debt and a higher deficit than the average of the Eurozone,” Dutch
finance minister Jan Kees de Jager told reporters as he arrived for the
meeting.

“We should look also at markets such as the United Kingdom, the
United States and Japan, which have both higher debts and higher deficit
levels,” the Dutch minister said. “Of course Europe has to do its part.
We need to consolidate and we need to front load. But do I have big
concerns about the sustainability of the Eurozone? No, I don’t.”

Cyprus finance minister Charilaos Stavrakis said the decline in the
euro “could lead to inflationary consequences” but added that, “at this
stage I don’t think that’s a big risk.”

At the Eurogroup meeting, the ministers will discuss the details of
a E440 billion special purpose vehicle as part of an E750 billion
backstop fund, with the main issue being whether the Eurozone countries
will jointly guarantee the money or whether each individual country will
take responsibility for its own share.

The finance ministers are likely to sign an agreement late Tuesday,
in time for the SPV to be formally approved at a meeting of European
Union leaders in Brussels on June 17 and 18.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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