July 04, 2007	Wednesday	Jamadi-us-Sani 18, 1428

BRUSSELS, July 3: The soaring strength of the euro in recent years has had only a “modest” impact on exporters and their profits, the European Commission said on Tuesday.

Instead, competitive wages and worker efficiency play a greater role in how the 13-nation eurozone performs in international trade, the European Union’s executive arm concluded in its Quarterly Report on the bloc.

The euro’s strength has become a hot political topic in recent months with French President Nicholas Sarkozy blaming it for the woes of European defence contractor EADS.

However, the Commission’s research found that fluctuations in exchange rates “have a relatively modest impact on the euro area’s export performance.”

It said that “between 2001 to 2006 exchange rate fluctuations curbed annual growth in euro-area exports by 0.6 percentage points, which is small relative to the five per cent average annual growth in the exports over the period.”

”The impact of the euro appreciation should ... not be overestimated,” the Commission said.

The euro had risen to an all-time high against the dollar in April of $1.3682 and last month reached a peak against the Japanese currency of 166.67 yen.

Despite concerns about the ascent of the single currency, the Commission said a strong euro had also boosted consumer purchasing power by making imported goods cheaper.

“The fact that some euro area countries have performed much better than others sharing the same currency is further evidence that the exchange rate plays only a limited role in the export performance of the individual countries,” it said.

“The causes for a lacklustre trade performance of some members must, therefore, be found elsewhere and particularly in domestic wage and productivity developments,” it added. —AFP