20000219

'Europe interested in strong euro'

FRANKFURT: Bundesbank council member Hans Reckers said on Thursday that Germany and Europe had an interest in a strong euro and problems stemming from the currency's weakness outweighed benefits it offered exporters.

"Germany and Europe have a fundamental interest in a strong euro," Reckers said in a speech.

"The trend reversal with an appropriate appreciation of the euro will come but naturally no one knows its timing," he said in the text of the speech distributed to media in Frankfurt.

"Some see a weak external value of the euro as a help for our exports but the short-term advantages of improved exports conditions are accompanied by far greater mid- and long-term risks," Reckers said.

He said wrong exchange rate signals could lead to current account imbalances and wrong economic decisions and hurt the euro's role as an international currency.

"A weak external exchange rate is not only a psychological problem," Reckers said.

He also said, however, that the current weak exchange rate was no reason for panic and its impact on internal price stability was limited by the size of the single currency area.

Reckers is the head of the regional central bank in the state of Hesse. He succeeded Ernst Welteke, who was appointed Bundesbank president and joined the European Central Bank's policy-making council.-Reuters