European Union finance ministers played down the impact of a fresh rise in the euro on Tuesday, focusing instead on reining in budget deficits and structural reforms aimed at making their economies more dynamic.
Arriving for a monthly meeting in Brussels ministers shrugged off the single currency's rise, which came despite a statement from the Group of Seven (G7) industrial nations at the weekend warning against large currency swings.
The effect of "further euro appreciation on growth would be just minor", Austrian Finance Minister Karl-Heinz Grasser said on arriving for the EU finance ministers' meeting.
"The world recovery is going on. This is the most important (thing)," he said, adding that the euro's 40 percent rise against the dollar since January 2002 had been "over-discussed". As Grasser spoke, the euro traded near a one-month high against the dollar at $1.2788. A stronger euro makes euro zone exporters' goods more expensive outside the currency zone.
On Saturday G7 finance ministers and central bank governors said that excessive currency swings and disorderly moves were undesirable.
They called for change in countries that lacked exchange rate flexibility, an apparent reference to Asian nations such as China which peg their currencies to the dollar.
Traders have since driven the dollar lower in the belief the G7 warning did not herald immediate action to support the US currency, but ministers from the 12 euro zone nations showed no signs of dismay at the euro's renewed rise.
"The meeting took note of the G7 communiqué and, in particular as far as it affected currency and exchange rates, there is nothing to add," German Finance Minister Hans Eichel told reporters.
Belgian Finance Minister Didier Reynders said he and his EU colleagues were mainly worried about large currency swings.
The finance ministers said France and Italy both needed to take action to limit their deficits. The bloc also needed to take more active steps to promote economic reform and could not rely on stronger growth to solve their budget problems.
"Optimism is generally a good thing in life but not necessarily when applied to budgetary projections," European Monetary Affairs Commissioner Pedro Solbes told reporters.
The ministers said France, which is expected to break EU rules limiting deficits to three percent of gross domestic product (GDP) in 2004 for the third year in a row, risked breaching the limit again in 2005.
They also said they were concerned about the slow pace at which Italy was cutting its debt and urged it to press on with planned pension reforms. Britain was on course to run a deficit above the EU's cap of three percent of gross domestic product in the 2003-2004 financial year.
Separately, the ministers discussed how to persuade Switzerland and four non-EU financial centres to sign tax co-operation deals so that the bloc can begin using its long-awaited rules to fight tax dodgers.
Agreement by Switzerland, not a member of the 15-nation EU, and four other small financial centres is a condition for the new rules for the taxation of income from savings stashed abroad to come into force on January 1, 2005.
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