Euro appreciation reflects strength, says Stark

Jurgen Stark, an executive board member of the European Central Bank (ECB), says the euro's recent appreciation to a record high against the dollar reflects the strength of the region's economy.
Jurgen Stark, an executive board member of the European Central Bank (ECB), says the euro's recent appreciation to a record high against the dollar reflects the strength of the region's economy.

Stark's comments come as the euro jumped to an all-time high of $1.3712 during late afternoon trading on 10 July, amid concerns over problems in the mortgage market and broader economy in the United States.

Stark argued that the euro's value remained within ranges experienced by the national currencies before the euro's launch in 1999.

Yet his remarks may well heighten tensions between France and Germany regarding Eurozone economic policies, particularly those relating to exports.

While Germany's finance minister recently expressed a preference for a strong euro, the newly-elected French president, Nicolas Sarkozy, has complained that the strength of the euro is penalising European companies and has urged the ECB to contain the currency's appreciation.

Stark had a positive view on the eurozone's economic prospects but stressed the "upside" risks to inflation with high levels of capacity utilisation pointing to "emerging constraints in the economy".

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