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		Home Page News You Can Use Unchecked euro rise would hit recovery-German banks Wed February 18, 2004 04:31 AM ET BERLIN, Feb 18 (Reuters) - Recovery in the 12 euro zone nations will be hurt if the euro continues its climb against the U.S. dollar unchecked in coming months, Germany's BdB private banks' association said on Wednesday. The single currency has not risen enough yet to outweigh the positive effects of strengthening demand amid a global recovery, but a "clear overshoot" should be avoided in the interests of all countries, the group said in its monthly report. "All nations involved should do their homework," the association said. Euro nations must boost their growth potential with further structural reforms, the U.S. should draw up a convincing plan for improving its public finances and boosting domestic saving, and Japan and China should deepen consolidation of their financial sectors, it added. China should also allow its currency more room to fluctuate against the dollar, the group said. Europe's common currency rose to a fresh record of $1.2927 (EUR=: Quote , Profile , Research ) early on Wednesday, as upbeat U.S. data this week failed to alter investors' bearish view of the greenback and sent it to new multi-year lows against higher yielding currencies. But it trimmed its gains slightly by 0930 GMT to stand at $1.2896. Speaking earlier this week, European Central Bank President Jean-Claude Trichet passed up an opportunity to express concern over the euro's strength, leaving markets with the impression that intervention to stem the currency's rise was not imminent. Germany's banks' association stuck to its forecast of 1.6 percent growth in Europe's biggest economy for 2004, but said the recovery would be driven largely by demand from abroad as domestic spending remained weak. "In the short term, not much will change in this picture of a split economy," the group said. "It should not be forgotten that the German economy has just emerged from three years of stagnation during which not only has its potential growth rate been substantially reduced but also the medium- and long-term income expectations of companies and households have deteriorated," it added.   Back to Original Article: News You Can Use
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