EUOBSERVER / BRUSSELS - Ministers from the 12 countries that share the euro last night (6 December) issued a joint statement expressing concern about the continued high level of the currency against the dollar.

As the euro reached new highs against the US currency and approached the 1.35 level, ministers described the recent currency moves as "an unwelcome development" and stated, "all major countries and economic areas must play their part more actively in reducing global imbalances".

A strong euro against the dollar makes exports from the euro zone to the US more expensive and is likely to dampen growth in the euro zone’s export-driven economy.

The President of the European Central Bank, Jean-Claude Trichet called on the US to play their part in stemming the decline of the dollar.

In an unusual appearance at the post-meeting press briefing, Mr Trichet said, "we all have homework to do … that is true on both sides of the Atlantic".

Austrian Finance Minister Karl-Heinz Grasser said it was "unacceptable that Europe is paying the bill for major imbalances in the US".

The pleas have so far fallen on deaf ears in Washington, with the administration emphasising that the EU needs to engage in structural reform to boost growth.

But the rhetoric from Europe seems to have had some impact on the markets, with the dollar gaining slightly in overnight trade as traders took the statement to be a further hint that European intervention to strengthen the dollar is possible.

"A strong euro against the dollar makes exports from the euro zone to the US more expensive and is likely to dampen growth in the euro zone’s export-driven economy."

Hmmmmm, when I said/wrote that I was berated (not that you did such Dreamer)for thinking the World's economy is tied to the US consumers, an our buying. :D

I think most of the European trade happens with other EU-countries, most of which share the Euro. I'm not quite sure, though. Does anyone know which percentage of our exports are headed for the US? At any rate, the EU currently is the worlds biggest trader (accounting for 20% of global imports and exports). And many countries on our export list are in Asia. I believe those tend to use the Dollar as well, so the low course of that coin certainly won't benefit our economy (short-term). Edit: I did some additional research and found out that the US acounts for 24% of EU exports and supplies 18% of its imports.

[ 12-08-2004, 12:04 PM: Message edited by: Dreamer128 ]

EU to EU trade won't be effected much by the Dollar dropping, they can just use the Euro, instead of the dollar. Now 24% of their exports are effected by the falling dollar, that is 24% of total exports to ONE consumer Block, the USA. The largest trader is not the same as the consumer, one buys and sells the other is the end buyer. What is the percentage of 20% of EU world trade is exports and what percentage is imports? If the EU's Export excede the Imports then the EU will be effected more by a falling currency then a trader that has more Imports then Exports. The EU economy is an export driven economy, if the EU sells less Exports the EU economy makes less money.

[ 12-08-2004, 01:04 PM: Message edited by: John D Harris ]