ROME (AFP) - The Group of Seven richest countries is considering coordinated intervention on currency markets to stabilise foreign exchange rates, Italian Economy Minister Domenico Siniscalco said.
"We are talking again about intervention, not unilateral but a coordinated intervention," he said.
"The place to coordinate exchange rates is the G7, where attempts were successful to stabilise the dollar-euro exchange rate around 1.20 at the G7 (meeting) in Boca Raton," he told a press conference.
The representatives of G7 countries tried to stabilise foreign exchange markets last February by adopting a statement in Boca Raton, Florida saying "excess volatility and disorderly movements in exchange rates are undesirable for economic growth."
The latest talk of intervention on currency markets comes after the euro smashed through the symbolic 1.30-dollar level on Wednesday for the first time since it began trading on foreign exchange markets in January 1999.
The euro dropped to 1.2877 dollars in the wake of Siniscalco's comments.
European officials have been raising the tone recently against the rise in the euro, which makes exports from the eurozone more expensive on international markets.
Siniscalco's comments followed on the heels of remarks from European Economic and Monetary Affairs Commissioner Joaquin Almunia who said: "Of course we are worried by this evolution of the exchange rate of the euro versus the US dollar."
In recent days, ECB officials, starting with its president Jean-Claude Trichet, have spoken out against the euro's rise, which he described as "brutal" and "unwelcome".
But such comments, which analysts have come to call "verbal intervention", failed to check the rise in the euro as it climbed to a new all-time high Wednesday of 1.3005 dollars.
At the same time, US officials have been notably silent about the dollar's weakness, which makes US exports cheaper on international markets.
The dollar's recent weakness against the euro is due largely to concerns about how the United States will attract the necessary capital inflows to fund the deteriorating trade balance and budget deficit.
The fear is that overseas investors might lose confidence in the debt-ridden US economy, placing their money elsewhere.
Analysts say market concerns about the deficits have increased in the wake of US President George W. Bush's re-election win last week.
11/10/2004 - 19:17 GMT - AFP