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France argues Euro is overvalued

Thursday, February 07 09:46:28

France will continue to argue that the euro exchange rate is too strong for the good of the European economy, Finance Minister Pierre Moscovici said today, a day after Germany said it did not think the euro was overvalued.

Moscovici, who plans to raise the issue at meetings of euro zone finance ministers and of the G20 economic powers next week, said Paris was not seeking to exert pressure on the European Central Bank or spark an international exchange rate spat.

"What we're saying is the international monetary system has to be reformed and stabilised so that the system is not prey to mood swings," Moscovici, speaking on a day when European Union leaders meet in Brussels, told France Inter radio station.

After a 6.5 percent rise in the past six months, the euro was at a 14-month high versus the dollar and its highest in two and a half years versus the yen, the minister said.

"It's about Europe calmly flagging the exchange rate problem without launching a currency war or exerting pressure on the European Central Bank," he said.

French President Francois Hollande rekindled debate over the euro earlier this week when he called for agreement in Europe on a medium-term target for the euro exchange rate.

That appeal has sparked a frosty response in Berlin, which has traditionally shunned French complaints that excessive euro strength hurts exports and crimps economic growth as a result.

A German government spokesman said on Wednesday exchange rates were set in financial markets and that Berlin did not consider the euro overvalued.

"We are not necessarily in the same situation or of the same point of view," Moscovici said. "I'm not hiding behind the euro. The main issue for France is about getting more competitive and more productive." (C) Reuters