BRUSSELS (MNI) – The euro is currently close to its fundamental
value, European Commissioner for Economic and Monetary Affairs Olli Rehn
said on Monday. The single currency is now trading at around $1.36.
“Estimations of equilibrium exchange rates – by the Commission and
the IMF – also indicate that the euro is close to its fundamental
value,” Rehn told lawmakers at the European Parliament in Strasbourg.
“Compared to the beginning of the year, the euro depreciation in
real effective terms amounts to 7%,” the Commissioner added.
“In real effective terms – that is trade-weighted and adjusted for
inflation – the euro is currently close to its long-term average,
following an overall depreciation in 2010 from an overvalued level at
the end of 2009,” he said.
“The euro appreciated versus the dollar since June 2010 due to
stronger data for the euro area economy and due to further expansion of
the US monetary policy,” Rehn said. “More recently, however, the euro
has weakened somewhat against most currencies as increased worries about
Member States’ public finances, above all in Ireland, weighed on the
euro.”
“Volatility in foreign exchange markets has increased in recent
weeks, with significant shifts in the value of major bilateral exchange
rates,” he noted.
Rehn said he considered it “an important step” that the G20 leaders
said they would “abstain from competitive devaluations of their
currencies.”
“It is clear that exchange rate flexibility must play a role in the
necessary rebalancing” of the global economy,” he said.
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
[TOPICS: M$$FX$,M$X$$$,M$$CR$,MGX$$$]
