Euro zone finance ministers are meeting in Brussels and heading the agenda is the strength of the European single currency against the dollar and the related matter of the weakening economic recovery in the region.
The euro last week set a new record above $1.30 and is expected to go on rising and undermining an export led recovery that is already looking fragile. The US Treasury Secretary John Snow is also in Europe for this week’s meeting of the G20 leading industrial nations in Berlin On his arrival Snow repeated that the US backs a strong dollar, but the reality is it is doing nothing to strengthen it. The recent rapid rise in the euro’s value to $1.3006 was described by European Central Bank President Jean-Claude Trichet as “brutal” – meaning very rapid – and “not welcome.” But analysts believe that the US will rebuff any calls for their co-operation in moves to increase the value of the dollar. And any intervention by the euro zone governments alone, without backing from the US and other G7 countries is unlikely to halt the rising euro.