LJUBLJANA, March 22: Global exchange rates should reflect economic fundamentals, which is not the case now, Slovenian Finance Minister Andrej Bajuk said in an interview with local daily Delo published on Saturday.

We see that exchange rates do not reflect the basic characteristics of economies, when considering the euro, the (US) dollar, the yen or the Chinese currency. Until that is established there will be problems, Bajuk said.

Bajuk, whose country took over the six-month rotating presidency of the European Union in January, said the whole eurogroup, the ECB and all central banks follow developments (on financial markets) with worry.

He said there was very big uncertainty in financial markets because the extent of losses is still unclear.

European banks as a whole have strengthened over the past years and can survive these financial turbulences in a completely different way that the American ones. Although the European Commission and the ECB cut 2008 economic growth estimates ... we are far from being able to say that there is recession in Europe, Bajuk said.

He said banks in Slovenia, which adopted the euro in January 2007, had only felt the financial turmoil indirectly, through tougher conditions for accessing long-term financing.—Reuters