AMSTERDAM (AFP) - The current level of the euro against the dollar is not a problem and volitility on foreign exchange markets is on the decline, EU Economic and Monetary Affairs Commissioner Joaquin Almunia revealed.
Speaking at a European Commission conference on the euro, Almunia said the current level of the euro posed no threat to the eurozone economic upswing, but that foreign exchange markets developments should be closely watched.
He said the value of the euro, which was steady in early London trading at 1.2407 dollars, was no longer as great a concern as it was last year, when the single currency was rising sharply.
"Instead, the focus has now shifted towards the likely impact of high oil prices on global growth and inflation," he said Monday.
"We share the prevailing view that the recovery in the euro area and the global economy remains on course, and we do not see the current value of the euro as presenting a problem in this respect," he said.
"While the risk of excessive volatility or overshooting in foreign exchange markets seems to have declined, developments will need to be monitored closely," he said.
Almunia said that while the surge in oil prices had given rise to considerable risks of second-round effects, "these have not materialised to any significant extent".
The European Central Bank had managed to anchor inflation expectations successfully, he said, noting that inflation index-linked bonds had been mostly below two percent since the launch of the euro in January 2002.
He said the recent period of protracted slow growth in the eurozone was disappointing, particularly in contrast with the situation in the United States.
While economic and monetary union had delivered macroeconomic stability, it had not yet delivered economic dynamism, he said.
"This is not due to failures of macroeconomic policy, but rather to the fact that, despite progress in structural reform, European product and labour markets are still not sufficiently flexible," he said.