MercoPress. South Atlantic News Agency

EU cautions about strong Euro

Germany's Central Bank president Ernst Weltke cautioned this Tuesday in Frankfort about the negative consequences for European Union exports of a rapid appreciation of the Euro in money markets.

"A sudden change in the value of the Euro vis-à-vis the US dollar could have turbulent effects for competitiveness conditions and global devastating consequences for the world economy", said Mr. Weltke.

"For the moment, the relation is still acceptable, since it's in line with its long term level", added Mr. Weltke who is a member of the European Central Bank Council.

Mr. Weltke was referring to the average price of the Euro during the last 25 years. Although the Euro is of recent creation, the EU Central Bank made an estimate of the value of the basket of twelve European currencies that made up the Euro.

The president of the Bundesbank was also critical of United States current economic and monetary policies.

"The US is facing twin deficits, budget and current account balance, that add up to 2 trillion US dollars which is a great imbalance".

However Mr. Weltke was confident that the Euro-Dollar parity adjustment will be gradual "since all responsible parties are aware of the situation".

European Central Bank officials have been lately making public statements trying to soften the growing appreciation of the Euro against the US dollar.