In an unusual step, BusinessEurope, the voice of EU business, has urged the Union to halt the appreciation of the euro against the US dollar, Chinese Yuan and Japanese Yen, arguing that the euro exchange rate has attained its “pain threshold” for European companies.
In a letter sent on 2 October, BusinessEurope President Ernest-Antoine Seillière urges Jean-Claude Juncker, Prime Minister of Luxembourg and President of the Eurogroup, to defend euro area interests following the continued rise of the euro against other currencies.
“Having crossed 1.40 against the US dollar and appreciating against Chinese Yuan and Japanese Yen, the euro exchange rate has attained a pain threshold for European companies,” writes Seillière ahead of European Central Bank (ECB) meeting on 4 October to review interest rates, currently at 4%.
Seillière urges the European G7 members [France, Germany, Italy and the UK] to raise the issue in the next G7 meeting on 19-22 October 2007 in order to proclaim that “the euro cannot be the variable of adjustment to reduce the US external deficit in the face of inflexible currency regimes in other part of the world.”
On the same occasion, BusinessEurope also urges EU member states to “put their house in order” and implement reforms supporting productivity and competitiveness to encourage European businesses to “continue investing and hiring”.
The calls from European businesses to stop the euro’s rise follow French President Nicolas Sarkozy’s criticism, earlier this autumn, over the inactivity of European central bankers, finance ministers and the ECB in dealing with the current crisis in international financial markets, as the weakening dollar has made French exports more expensive.
This week, the Italian Prime Minister Romano Prodi also lent his voice to complaints about the strong euro and said that he had shared his concern with the German Chancellor Angela Merkel.
The Eurogroup, made up of the 13 finance ministers from the eurozone countries, will meet on 8 October 2007.