Euro slide not linked to EEurope bailout concerns

3rd March 2009, Comments 0 comments

EU commissioner says it’s unfair to blame Monday’s euro slide on recent EU’s announcements when markets in Asia started in a weak position.

PRAGUE – EU Economic Affairs Commissioner Joaquin Almunia rejected claims Monday that a slide in the euro was tied to the bloc's ruling out of a broad bailout package for its ex-communist member states.

"I think it's completely unfair, the kind of messages that some people are sending ... that the EU is not supporting (or) ... the EU has given up," Almunia said on the sidelines of a conference in the Czech Republic, which currently holds the rotating presidency of the 27-nation bloc.

"Today the markets started in a very weak position in Asia and I don't think that is related to the decisions that the EU adopted (Sunday)," he said, referring to Sunday's emergency summit in Brussels.

Earlier Monday, analysts had blamed the euro's sharp fall against the dollar on an EU rejection of calls by troubled ex-communist member states such as Hungary for a region-wide bailout.

In late morning trading in London, the euro fell to 1.2603 dollars from 1.2671 late on Friday but then steadied in afternoon deals.

"The failure of European leaders to act decisively to provide financial assistance to the region will weigh on the euro," said economist Lee Hardman at The Bank of Tokyo-Mitsubishi UFJ in London.

The financial crisis has hit eastern and central European countries particularly hard because their economies are highly dependent on a steady flow of credit from Western sources that has all but dried up.

But while Hungary and other countries such as Latvia are in dire straits, ex-communist states which are faring better, such as the Czech Republic and Poland, have poured cold water on a "one-size-fits-all" aid package.

EU leaders did however promise to assist any member state in need of help.

"Yesterday the EU has not rejected anything. It has agreed a lot of things," Almunia insisted.

He reeled off steps taken over recent months and weeks, including a six-billion-euro package for Hungary, EUR 3 billion for Latvia and a 3.3-billion-euro hike in the European Investment Bank's lending capacity for the region.

"All these things showed a renewed commitment to support countries in the central and eastern European region that need support. Not all the countries are in the same situation," Almunia said.

AFP / Expatica

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