Euro strength compares to the Dollar increases the chances of slowdown.

Leading European finance ministers have indicated that they are “increasingly concerned” over the strength of the Euro against the Dollar, which has the potential to further the current phase of economic slowdown.

The Luxembourg Finance Minister Jean-Claude Juncker explained in Brussels today that: “it’s clear that we look at exchange-rate developments very closely and with some concern.”

In the past year the Euro has experienced a 16 percent against the dollar reaching a record $1.5275 yesterday which was a 4 percent increase on the rate at the beginning of the year.

According to many the $1.50 mark is a psychological barrier and this will threaten US exports at a period when the US slowdown is showing signs of effecting European growth.

The ECB President Jean-Claude Trichet commented yesterday that a strong dollar policy is central to stability.

He argued that: “in the present circumstances, I consider very important what has been affirmed and reaffirmed by the U.S. authorities, including the secretary of the Treasury and the president of the United States of America, according to whom a strong-dollar policy is in the interests of the United States.”

Currently Europe’s economic expansion is slowing with a 0.3 reduction on the previous quarter just as the U.S. borders on recession.

Story link: Euro strength compares to the Dollar increases the chances of slowdown.