French Prime Minister Jean-Pierre Raffarin joined German Chancellor Gerhard Schroeder in urging the European Central Bank to trim interest rates to stem the euro's rise against the dollar and protect Europe's economic recovery. ``I share Chancellor Schroeder's view on the reduction of interest rates,'' Raffarin told journalists in Paris. ``The euro- dollar exchange rate and the acceleration, extent and brutality of its movement isn't a good situation for the U.S. or for Europe.'' German business confidence unexpectedly fell for the first time in 10 months in February, hurt by the euro's 15 percent rise against the dollar over the past year. The euro's gains are curbing exports at companies including Volkswagen AG and L'Oreal SA.
The ECB has said it's concerned about ``excessive'' moves in the exchange rate. At the same time, the bank says the stronger euro will make imported goods such as oil cheaper, leaving consumers with more money to spend. The euro fell after Raffarin's comments. The currency dropped to $1.2439 at 10:29 in Paris from $1.2501 yesterday. The ECB in June lowered its benchmark lending rate to 2 percent, the lowest in any euro country since at least 1946. That's still twice the rate of the U.S. Federal Reserve. ``Global growth picked up,'' Bank of France Governor Christian Noyer, a member of the ECB's governing council, told French radio station RTL yesterday. ``We can positively see that it's helping us through our exports.'' The German and French leaders are concerned that slowing exports may crimp an economic recovery. Growth in the 12 nations sharing the euro slowed to 0.3 percent in the fourth quarter from 0.4 percent in the previous three months.
``The weakness of the dollar and the resulting euro strength is giving us export problems and the European Central Bank should give this its closest attention,'' Schroeder told German radio station NDR yesterday. ``There is reason to also think about consequences as far as interest rates are concerned.'' ``Exchange rates don't conform with the economic reality, the French Prime Minister said today. //www.bloomberg.com