The Group of Seven economic powers regard abrupt or large moves in the major currencies as undesirable, France's central bank chief said on Wednesday ahead of a G7 meeting next week set to address foreign exchange rates.
Bank of France Governor Christian Noyer, who sits on the European Central Bank's Governing Council, also said the ECB's interest rates were appropriate. The ECB held interest rates at 2 percent earlier this month and signalled it was in no hurry to raise them.
"We consider today that our interest rates are appropriate," Noyer told France's Radio Classique.
"In Europe, our analysis today is that inflation ... should fall slightly below 2 percent during the course of this year, 2005. And growth in the euro zone is close to the average growth (rate) over the long-term," he said.
Turning to currencies, Noyer said the dollar was weak -- echoing comments from French Finance Minister Herve Gaymard, who said on Monday the U.S. currency's slide would have to be addressed at the G7 meeting in London next week.
"There is a weakness in the dollar that we have had for some months," Noyer said. "We live in a world where there are fluctuations (in currencies). But the countries of the G7 wish that these fluctuations remain limited."
"We have said clearly on several occasions -- the president of the European Central Bank, Jean-Claude Trichet, said it again recently -- that disorderly movements, movements that are too abrupt or too large between the big currencies, are undesirable because they present dangers for economic growth," he added. On Monday, France and Germany said Washington must address the dollar's fall by cutting record U.S. deficits but suggested the G7 countries remained broadly happy with the exchange rate policy spelled out a year ago.
After meeting Noyer and Gaymard on Monday, German Finance Minister Hans Eichel said the G7 would stick largely to the message it issued at a meeting in Boca Raton, Florida, in February last year, when a G7 communiquГ© said "excess volatility" in currency exchange rates was not desirable.
Policymakers from the G7 (Britain, Canada, France, Germany, Italy, Japan and the United States) plus Russia meet in London on Feb. 4-5 and they have this time invited key emerging market economies to meet them, including China.
Ahead of the meeting, European and U.S. policy makers have been urging Asian countries, especially China, to let their currencies rise to share the burden of dollar weakness.
Keeping up the pressure, Noyer on Monday urged large emerging economies, especially in Asia, to show "greater responsibility" in their economic policy, including on foreign exchange.
The Boca Raton statement calls for flexibility in exchange rate regimes in major economic zones, which officials say refers to Asia in general and above all China, which pegs its currency to the dollar at what many consider too low a level.
A senior Chinese ministry official said on Wednesday that the exchange rate of China's yuan currency will definitely be discussed at the G7 meeting in London, which Chinese Finance Minister Jin Renqing will attend.