LONDON, Sept 30, 2007 (AFP) – The high-flying euro, which last week soared from record to record against the dollar, has sparked sharply contrasting reactions in France and Germany, with Paris complaining and Berlin applauding. The single currency, shared by 11 other European nations besides France and Germany, shot to a new all-time high of 1.4263 dollars on Friday.
While French President Nicolas Sarkozy has made no secret of his distress at the euro’s upward trajectory, which tends to punish French exporters, his German counterparts remain serene.
Germany “prefers a strong euro to a weak euro,” a spokesman for the German finance ministry said last week.
A rising, healthy euro, tending to exert downward pressure on prices of imported products, acts as a shield against inflation, notably by mitigating the effects of steeper oil prices. Crude oil is bought and sold in dollars.
A strong euro can however eurozone dampen exports, making goods more expensive and therefore less attractive to foreign buyers.
But Germany has so far been largely spared such ill effects, notably as it specialises in high-quality capital goods that are less susceptible to competitive pressures.
Some economists argue that the