BRUSSELS, May 17, 2010 (AFP)
Senior European figures sought to talk down the crisis facing the euro ahead of Monday’s meeting of eurozone finance ministers, but the currency fell further as the Asian markets opened.
French Finance Minister Christine Lagarde minimised the heavy falls the European stock markets experienced at the end of last week, in comments published in Monday’s edition of the French daily France-Soir.
“The movements that we saw Friday in the European markes are brutal movements on extremely narrow volumes,” she told the paper.
“So I only set a very limited importance to those movements.”
And she insisted the euro, which on Friday hit its lowest levels since October 2008, was not in danger.
The 16 eurozone countries had shown they were determined to save the currency, she said.
“We have taken and are going to take all measures to do that,” she said.
But in trading on the Tokyo market Monday, the euro tumbled further, to a four-year low, as persistent fears over eurozone debt continued to hammer the single currency.
The European currency fell to as low as 1.2287 dollars in Tokyo trade from 1.2358 in New York Friday.
The EU and IMF last week agreed a package worth almost one trillion dollars designed to prevent the Greek crisis from spreading to other weak eurozone economies.
But the move has failed to reassure markets, with stocks and the euro continuing to tumble, prompting Spain, Portugal, Italy, and France to announce belt-tightening measures last week.
On Sunday, EU Energy Commissioner Guenther Oettinger told Germany’s Tagesspiegel newspaper: “I am very confident that the worst of the danger to our currency is behind us.”
But he added: “One thing is clear: we have only won time with our decisions of recent days, we have not won the battle. The battle will be won when member states draw up their budgets for 2011.”
German Chancellor Angela Merkel, sent a similar message in a speech to the Confederation of German Trade Unions Sunday.
Last week’s rescue package had “done nothing more than to buy time until we have brought order to these competitive differences and to the budget deficits of individual euro countries.”
Recent speculation against the euro “is only possible because of huge differences in the economic strengths and debt levels of member states,” she said.
The question of taming market speculation will be on the agenda of Tuesday’s meeting of all 27 finance ministers of the 27 EU nations: a measure to regulate the hedge funds industry is high on their agenda.
Several European leaders have blamed hedge fund speculation for having contributed to the global financial crisis.
Despite resistance from Britain, home to about 80 percent of the global hedge fund industry and the United States, which fears US funds could be locked out of European markets, the regulation enjoys wide support in the EU.
Under the new rules, hedge fund managers and private equity firms could be forced to curtail the amount of leverage they use, make regular disclosures about their portfolios and be forced to hold their assets with European banks.