The euro's strength against the dollar will eventually curb overseas demand for German goods, the German finance ministry said in its monthly report today.
"In the short term, hedging activities should stabilise export-orientated business, even though growth in foreign orders weakened somewhat in the September to October period," the report said.
"The strengthening of the euro against the dollar will tend, with a time lag, to have a negative effect on overseas demand," it added.
Private consumption was still a lingering problem for f the German economy, according to the Finance Ministry, even though consumer sentiment indicators had shown some signs of a pick-up despite continuing job security fears.
Growth had slowed in the third quarter, due to weaker exports, although the report said an increase in capital equipment investment boded well for the future.