(Adds response from ECB, more details, changes dateline to Frankfurt) FRANKFURT, Oct 6 - The European Central Bank will do all that it can to ensure that the dollar's correction is slow and gradual, according to a newspaper interview with ECB President Wim Duisenberg. A dollar decline is unavoidable given the huge U.S. trade deficit, but the euro should not be the only currency to bear the brunt of its adjustment, the Spanish business newspaper Expansion quoted Duisenberg as saying in its Monday edition. "We hope and pray that this adjustment, which is unavoidable, will be slow and gradual. Until now, the adjustment is only against the euro," Duisenberg was quoted as saying. ECB spokesman Manfred Koerber told that Duisenberg in the interview did not comment on currency intervention to halt the euro's rapid climb against the dollar, as the Financial Times suggested.
"He did not answer the question. He left this question completely open," Manfred Koerber, head of communications at the ECB, told . The Financial Times said in its Monday edition that Duisenberg, in the interview with its sister newspaper Expansion, had implied that ECB intervention to halt the euro's sharp climb against the dollar was unlikely. But it did not have a direct quote from Duisenberg on intervention, and Koerber said it was wrong to draw that conclusion.
SLOW EURO ZONE GROWTH
The euro has jumped over seven percent in the past month back toward its record highs against the dollar, but it retreated a little on Friday after stronger-than-expected U.S. data and was trading on Monday around $1.1549 In the interview, Expansion also reported that Duisenberg said a very gradual recovery in the euro zone has already begun. "The European economy is going to recover, but slowly and very gradually. We expect it to grow in the second half of 2004 around the level of its potential (between 2.0 and 2.5 percent). [Paper's parenthesis]. The recovery has started but very slowly," it quoted Duisenberg as saying. These comments are in line with his recent outlook for the 12-nation currency bloc, which he repeated at a news conference last week after the ECB left interest rates unchanged for the fourth straight month at 2.00 percent. The ECB president also drove home the importance of fiscal discipline. Budget discipline rules were agreed voluntarily and should be adhered to, the newspaper reported him as saying.
"Those countries that have not taken advantage of the growth phase, and I'm talking about France, Germany, Italy and Portugal, are not in a position to protest about the rules of the pact: it's their own fault," the newspaper quoted Duisenberg as saying.//