Bank chief says euro undervalued, predicts brutal turnaround

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The Independent Online

Europe's single currency is seriously undervalued and a turnaround in the currency's fortunes that risks being "brutal is likely soon," the vice president of the European Central Bank said in an interview published Monday in France's Les Echos financial daily.

Europe's single currency is seriously undervalued and a turnaround in the currency's fortunes that risks being "brutal is likely soon," the vice president of the European Central Bank said in an interview published Monday in France's Les Echos financial daily.

"There is no doubt: the euro is seriously undervalued, its rate does not correspond to the fundamental economic situation," Christian Noyer said.

Noyer said that the fact that the euro is undervalued would be confirmed this weekend during a meeting of finance ministers from the Group of Seven most industrialized nations in Prague.

The euro, adopted by 11 European countries, has lost some 27 percent of its value against the dollar since it was introduced in January 1999 and ahead of its 2002 start date for circulation.

"A turnaround is going to take place. Taking into account the recent evolution, it risks being brutal," Noyer told Les Echos.

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