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EUROPE: "Turkey Country Economic Memorandum: Trading up to High Income (2014)" report

EUROPE: "Turkey Country Economic Memorandum: Trading up to High Income (2014)" report. 106-page report by World Bank.

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back to index backEUROtalk April,  2007


Euro strength no threat

The current strength of the euro represents no threat to the eurozone's economy, the head of the IMF's European Department, Michael Deppler, said in a newspaper interview published yesterday.

"We see no threat to recovery," Deppler told the Financial Times Deutschland in remarks reproduced in German.

"The euro continues to be fairly valued," he said on the sidelines of the spring meeting of the IMF and the World Bank in Washington.

The rise in the value of the euro reflected the growing economic strength of the 13-nation bloc, and exports would not be adversely affected, Deppler argued.

Exports were "continuing to perform well," he said.

The euro rose to $1.3534 yesterday, reaching the highest level since January 3, 2005 after European Central Bank chief Jean-Claude Trichet sent a clear signal on Thursday that eurozone interest rates were set to rise in June.

Deppler urged the ECB, nevertheless, to monitor the euro's exchange rate very closely.

"If the euro's effective exchange rate changes noticeably, that would have to be taken into account in monetary policy," the IMF official said.

Nevertheless, if the euro did not rise still further, the ECB's monetary policy stance was appropriate, Deppler said.

With the eurozone's economic performance close to or above potential and inflation at around 2.0 per cent, "a further interest rate increase to 4.0pc by the summer would seem warranted," he said.

And additional monetary tightening might be necessary beyond that "if growth continues above trend and the risks from wages and prices increase," Deppler said.
 
Source: The Gulf Daily NewsGAI


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