Trichet's concern at euro surge

THE EURO'S record strength prompted verbal intervention by European Central Bank (ECB) president Jean-Claude Trichet yesterday, in a switch of tactics that signalled rising official concern about the economic damage threatened by the currency's recent surge.

"In present circumstances, we are concerned about excessive exchange rate moves," Mr Trichet said in prepared comments after a meeting of the world's central bank governors in Basel, Switzerland. "Excessive volatility and disorderly movements . . . are undesirable for economic growth."

His comments followed the ECB's hardline stance on interest rates at last week's policy-setting meeting, when it made clear that combating euro-zone inflation - at a 14-year high of 3.2 per cent - was its main priority. Then Mr Trichet had failed to express concern about the euro, sending the currency above $1.54 for the first time.

Yesterday's verbal intervention sent the euro lower and appeared aimed at calming market movements.

© 2008 Financial Times

This article appears in the print edition of the Irish Times