The chairman of the Eurogroup of finance ministers Jean-Claude Juncker said Thursday that Europe was stepping up its “vigilance” about sharp and unwelcome swings in currency rates. “I don't think we should start to become hyperactive,” Juncker told journalists when asked how Europe should react to the euro's record-breaking run on currency markets. “We have to watch closely what's happening and we are increasing our vigilance,” he added, speaking hours after the euro struck a record high above $1.56 amid mounting concerns over the US economy. “We don't like the excessive volatility of exchange rates,” Juncker said speaking on the sidelines of a meeting of conservative European leaders ahead of a full EU summit. Juncker, who is also Luxembourg's prime and finance minister, said he was “very happy” to see that US President George W. Bush reaffirmed Washington's commitment on Wednesday to having a strong dollar. He also criticised market participants for paying too much attention to short-term indicators and not taking a longer term view of the US economy amid growing concerns that US growth has ground to a halt. “I have no understanding for those in the financial markets who are exclusively attentive to short term,” he said. The US unit fell to record lows against both the euro and the yen Tuesday on rising fears that the world's biggest economy has lurched into recession and doubts about the effectiveness of central banks' efforts to ease credit market tensions. “I hope the Americain economy will come back to a normal growth in a short period,” Juncker said. The euro pushed to an all-time high of $1.5625 in European trading, beating a day-old record of $1.5559 - before declining to $1.5572 even as a new report showed American retail sales falling in February. That was still above the $1.5526 it bought in New York last Wednesday. The dollar dropped below 100 Japanese yen for the first time since November 1995. It traded as low as 99.75 yen before recovering some ground to 101.68 yen, compared with Wednesday's level of 102.04 yen. Japanese leaders quickly cautioned against instability in currency markets, but made no mention of any intervention to stem the dollar's slide. The yen's strength is bad news for Japan's economy, which has been showing signs of weakening, because it makes exporters' products more expensive abroad and erodes the value of their overseas earnings. ECB president Jean-Claude Trichet told the French newspaper Le Point that “especially with the dollar, I reaffirm that the disorderly movements of exchange rates are undesirable from the point of view of economic growth.” __
