European finance ministers got help from Washington on Saturday as they renewed an endeavour to prevent the euro's rise getting out of hand. Whether that would prevent the euro rising further on Monday or in coming weeks was not clear, but it coincided with attempts by the Europeans to calm currency traders' ardour for the euro.
In an interview released overnight, US Treasury Secretary Henry Paulson said that he still believed in a strong dollar - confirming a line Europe was striving to convey to traders who keep betting on further euro rises versus the dollar and yen.
"As I think you know, I believe very strongly that a strong dollar is in our nation's interest, and I'm a big believer in currencies being set in a competitive, open marketplace," he said in a US Public Broadcasting Service interview.
The comment plugged a hole in the message European officials made during talks in Berlin on Friday and Saturday, namely that markets could get burned by aggressive exchange rate bets.
European Central Bank President Jean-Claude Trichet said he had already heard Paulson reiterate Washington's dollar position in close-door talks among the G7 powers on April 13 and noted the point 'with interest'.
He was addressing a news conference during Berlin meetings where some people conceded that a degree of euro appreciation, though potentially bad for exporters, was logical when the economy of the region was now growing healthily again.
"We're in excellent times in terms of growth," said Trichet. The euro hit a record high of 162.42 yen earlier this week as traders took an absence of broader G7 support for Europe's case as a cue to push the euro and sterling higher, and the dollar and yen down.
The European currency finished the weak trading near $1.3600 near a record $1.3670 it hit in December 2004, and at between 161 and 162 yen. Currency strategists said on Friday new records could be hit after the weekend.
CURRENCY PAIN Airbus is one company which has highlighted how it suffers when the euro gains on the dollar, the currency of arch-rival Boeing, while Germany's Volkswagen complained about the yen. "The weakness of the Japanese yen versus the euro has now reached a level where it represents a massive competitive advantage for our Japanese competitors," Volkswagen Chief Financial Officer Hans Dieter Poetsch said on Thursday.
Trichet and Jean-Claude Juncker, representative of euro zone ministers, attempted again to discourage one-way bets by markets lured to the euro by rising interest rates, and fearless so far of co-operation between G7 governments to wrong foot them.
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