European Central Bank chief warns of 'brutal' foreign exchange movements

FRANKFURT (AFP) — European Central Bank president Jean-Claude Trichet said Friday he did not welcome "brutal" exchange rate movements, a few hours after the euro hit another record high against the dollar.

Trichet had used the word "brutal" in 2004 when there was a question of whether the ECB would intervene to stem an earlier rise by the euro against the dollar.

Earlier in Asian trading the euro had struck a new peak of 1.4928 dollars. The ECB chief also said that "abrupt and sharp" movements by foreign currencies did not favour global growth, reiterating comments made early this month when the bank left its main interest rate steady at 4.0 percent.

Trichet added Friday that he would discuss exchange rates during his forthcoming visit to China.

"I have an occasion to discuss with our Chinese counterparts the message we agreed on at the G7 (Group of Seven) on the emerging market currencies," he told reporters on the margins of the European Banking Congress here.

Trichet also said he "enormously appreciated" remarks by US Treasury Secretary Henry Paulson that a strong dollar was in the US economic interest.

Many market observers believe that US officials are in fact content to let the dollar slide against other major currencies because it favours US exports.

Eurozone exports, meanwhile, are suffering from the euro's sharp rise in value against the dollar, yen and Chinese yuan.



Taken from http://afp.google.com/article/ALeqM5izIs8WYqxzLRUmdrKZIiJUc5NMYA