Devaluing euro won’t solve economy woes: Portugal

STRASBOURG, France - Structural reforms, not devaluing the euro, is the way for Europe to resolve its economic problems, European Union president Portugal said on Thursday.

By (Reuters)

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Published: Thu 12 Jul 2007, 5:10 PM

Last updated: Sat 4 Apr 2015, 10:20 PM

Portuguese Finance Minister Fernando Teixeira dos Santos, whose country holds the rotating EU presidency, said he did not believe the euro zone had an exchange rate problem.

‘Let’s not fall into the temptation of trying to resolve real economic problems by devaluing or bringing about changes in nominal exchange rates,’ he told the Euorpean Parliament.

‘The solution lies in structural reforms. If we want to gain competitivity it’s not by devaluing,’ he added. ‘If we fall into the temptation of affecting the nominal rates then we will be falling asleep in Europe.’

Dos Santos’ comments follow a drive by French President Nicolas Sarkozy to push the European Central Bank towards a more active exchange rate policy -- pressure the ECB has resisted.

The euro EUR hit a record high against the dollar on Thursday as fears persisted that problems in riskier US credit markets could spread to the wider economy.

‘It’s not at the nominal exchange rates that we have got to look,’ dos Santos said. ‘If we look at real rates and the trend of the euro in real terms (it) is not out of alignment with its behaviour in the past over the long term.’

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