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Germany's Glos Fears Euro Will Remain Strong

Reuters
Friday, 14 Sep 2007 | 4:37 AM ET

German Economy Minister Michael Glos said on Friday he feared the euro would remain strong and turbulence on financial markets would continue.

"I am worried for the export economy that the strong euro will stay like this," Glos told parliament.

Many economists have said the euro's rise will gradually hurt firms in Germany, the world's biggest exporter, although Europe's biggest economy is better positioned that some other euro zone economies to handle the appreciation.

The euro hit highs against the dollar on Thursday. Glos added, however, that there were some positive effects, such as cheaper oil imports. "The stronger euro will compensate for a higher oil price," said Glos. He also expected the turbulence on financial markets to continue.

"The turbulence is far from over.. now we must do everything to make sure the crisis does not spill over into the real economy," Glos told parliament.

Germany has been hit harder than other European countries by the credit crunch, triggered by banks' exposure to defaults on U.S. subprime home loans made to people with poor credit.

Two banks in Germany have needed bailouts.