The euro is stable at present but is destined to strengthen before the end of the year, said Pedro Solbes, the European Union's commissioner for economic and monetary affairs.
Europe's 19-month-old single currency has depreciated 19 per cent against the United States dollar since its launch but has recovered from an early-May low of 88 euros per dollar and is now trading at about 95.
'It is a stable rate of exchange,' Mr Solbes said yesterday during a stopover in Hong Kong after a meeting over the weekend in Fukuoka, Japan, with finance ministers from the Group of Seven industrialised economies.
'[But] it does not reflect the real strength of the European economy. We think the prospects of the European economy are quite good.' Robust domestic demand, particularly private consumption, would push the European Union's economic growth rate to 3.5 per cent this year and at least 3 per cent next year, he said.
That easily tops last year's rate of 2.3 per cent.
'I am certain that the euro exchange rate will better reflect the economic realities in Europe,' Mr Solbes said in a lunch address to the European Chamber of Commerce.
