The exchange rate of the euro against the US dollar stands at about a 10-year average and is not unusually low, European Central Bank board member Christian Noyer was quoted as saying today.
"The euro is and remains a strong currency. Its purchasing power is optimally protected, simply because the European Central Bank is obligated to ensure price stability and will continue to that," Mr Noyer said in the interview with German business daily Handelsblatt.
"The current exchange rate of the euro against the dollar is at about the average of the last 10 years. That is by no means an unusually low level," Mr Noyer, who is also governor of the Bank of France, said.
The euro, which fell more than 7 per cent against the dollar in May, hit a new four-year low yesterday on worries that the euro zone's debt crisis is spreading to its banking system. It is down around 14 per cent so far this year.
Mr Noyer also said that it would take some time to fully restore confidence.
"That is part of the explanation of capital flows, which have consequences for the development of the exchange rate. But I think the appropriate measures have been taken. And the ECB has made strong decisions to restore the effectiveness of monetary policy - so the groundwork has been laid," he said.
"I see no reason why confidence should not be fully restored, why financial markets should not calm down and return to normality."
Asked whether the worst of the crisis was over, Mr Noyer said there was evidence of a return to growth emanating from Germany and France in the middle of last year.
"It is gradually strengthening. If we manage to restore and maintain the confidence of households and companies I see no reason why growth should not continue," he said.
Reuters