Frankfurt, Dec 24: The European Central Bank's vice president said he is convinced THE EURO will appreciate against other currencies next year. "I have no doubt about it," said Christian Noyer. Experience proves that a currency, in the longer term, will reflect its fundamental value against other currencies, he said in an interview with news agency VWD.That will also be the case with the euro, as next year price stability and economic growth become clearer in the euro zone, said Mr. Noyer.In Wednesday afternoon, the euro was trading at around $1.009, up from $1.0086 late Tuesday in New York.
Asked about intervention, Mr. Noyer said the ECB has no target rate for the euro, and setting one could be ruinous. "The ECB has no exchange-rate target but also doesn't have a policy of 'benign neglect,' " he said, adding,"An exchange-rate target or target range, in fact, could endanger the real goal of euro-zone price stability." As to monetary policy, following the ECB's interest-rate rise Nov. 4, Mr. Noyer said it is still accommodative, although not as much as before November.
The effect of the rate increase isn't yet evident in economic indicators, since those mostly refer back to circumstances before the increase, Mr. Noyer said.
The ECB's monetary policy, he continued, takes an outlook of economic conditions over a 12- to 18-month period. "We react with monetary policy, not to short-term data and changes, rather we work with a medium-term policy," said Mr. Noyer, adding, "We act calmly and at the appropriate moment; I hope the markets understand that we won't let ourselves get nervous."
-- The Wall Stree Journal
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