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Mon, Nov 26, 2007 - Page 10 News List

Rising euro creates worries among European exporters

AFP , FRANKFURT, GERMANY

Until recently, Germany has maintained an air of serenity as the euro spiked higher against other major currencies, even though exports are the motor of growth for the eurozone's biggest economy.

That has begun to change however, as seen in particular through comments by German Chancellor Angela Merkel, who told TV news channel N24 last week that the single currency's rising value was a double-edged sword.

"We are happy of course to have a solid currency. But for exports it naturally poses problems," Merkel said.

"We are working on an international level so that currencies balance out against each other in a reasonable manner," she said.

Her comments were moderate in comparison with the alarmist tone of French President Nicolas Sarkozy, but they marked a shift from previous German statements as the euro currency pursued its steady climb.

The euro, which is approaching the symbolic level of US$1.50, surpassed early this month the all time high set 12 years ago by Germany's heritage currency, the deutsche mark, several German newspapers said with concern.

Most German officials had appeared unconcerned by the potential effect on exports, with the notable exception of conservative Economy Minister Michael Glos, until last week.

On Thursday, the German chief executive of Airbus, Thomas Enders, dropped a bombshell, saying the euro's relentless rise was "life-threatening" to his company.

On Friday, Matthias Wissmann, head of the German automobile federation VDA said: "The exchange rate development makes business more difficult and is not providing us with tailwinds in exports" to the US and other regions where the dollar is widely used such as Asia and Latin America.

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