Signs of economic recovery in Europe will boost the value of the euro in the medium term, according to the president of the Bundesbank, Dr Hans Tietmeyer. But he said it was up to Europe's politicians to ensure the currency was based on sound economic policies.
"I believe we can now establish - at least the indicators suggest this - that the weakest development in the euro area has now been reached and we are now entering a generally upward trend," he said.
Dr Tietmeyer is a member of the governing council of the European Central Bank (ECB) which meets in Frankfurt tomorrow to review interest rates in the euro area. Despite the slide in the currency's value against the dollar, he ruled out any rise in European interest rates.
Dr Tietmeyer's remarks follow a succession of unexpectedly good economic figures from Germany, which accounts for half of the total output of the euro area.
Dr Tietmeyer's designated successor as Bundesbank president, Mr Ernst Welteke, suggested yesterday that the end of the Kosovo conflict could boost the value of the euro.
And he said that, if Europe's economy was emerging from the doldrums while America's economic growth stalled, investors might think twice before buying dollars rather than euros.
