November 16, 2001	Friday	Shaba'an 29, 1422

TOKYO, Nov 15: The European single currency is undervalued based on the economic fundamentals of the euro-zone countries, the vice-president of the European Central Bank (ECB) said here on Thursday.

Because of the strong fundamentals and the absence of imbalances, external or internal, we strongly believe there is room for appreciation in the value of the euro, Christian Noyer said at a symposium on the currency.

The present rate does not express the inner strength of the euro and sooner or later its value will be higher.

The ECB’s vice-president stressed the central bank wanted to see a strong euro based on strong economic fundamentals.

The fundamentals are there, he argued, adding the entry into circulation of euro notes and coins from next January would make the euro more attractive.

Commenting on the ECB’s unexpectedly large interest rate cut last week, Noyer said the economic slowdown in the 12-nation euro-zone was likely to be a little deeper than previously expected.

On November 8, the ECB cut its refi rate by half a point to 3.25 per cent, the lowest level since February 2000, in a bid to breathe life back into the sputtering global economy.

The euro bought $0.8807-09 compared to $0.8823 in New York and $0.8801 in Tokyo late Wednesday.

Against the yen, the euro was quoted at 107.51 compared with 107.28 in New York and 107.14 in Tokyo Wednesday afternoon.

Noyer also reiterated ECB decisions are in no way influenced by European governments.

I can assure you that the ECB is absolutely not influenced by politicians and that we will continue to make decisions independently, he said.

Also on Thursday, Didier Reynders, Belgian finance minister and the current head of the Eurogroup of euro-zone finance ministers, said in Paris that the ECB’s independence did not preclude dialogue with European government ministers.

FRANKFURT: Prospects for the 12-country euro zone will brighten next year when the economy will begin to recover, the European Central Bank said on Thursday.

The conditions exist for a recovery to take place in the course of 2002 and economic growth to return to a more satisfactory path, the ECB said in its November monthy bulletin, released on Thursday.

The economic fundamentals of the euro area are sound and there are no major imbalances which would require a prolonged adjustment, the report continued.

The uncertaintly currently overshadowing the world economy should diminish over time.

A substantial slowdown in inflation and tax reductions in several euro-zone countries should have further positive effects on growth, the ECB argued.

Furthermore, interest rates across the entire yield curve are now low, meaning that current financing conditions are clearly supportive to economic growth.

The ECB defines area-wide growth potential this year as 2.0-2.5 per cent.—AFP