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ECB boss seeks to aid euro
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May 5, 2000: 6:48 a.m. ET
Duisenberg promises currency will rise, pledges to keep lid on inflation
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LONDON (CNNfn) - With the euro languishing near record lows against the world's leading currencies, European Central Bank President Wim Duisenberg came to the beleaguered currency's defense Friday, promising the euro would strengthen over time.
"European citizens can be assured that the future of the euro is that of a strong currency, based on price stability and the strength of the European economy," said Duisenberg in a statement. 
The ECB chief has endured a difficult time after being criticized by economists and investors for ineffectively communicating the bank's monetary policy strategy. He admitted Friday that Europeans from across the 11-nation euro zone have questioned the currency's declining value and the impact the slump will have on inflation.
"To them, I would like to say the following: I understand their concerns, since a persistently lower euro exchange rate might ultimately lead to higher prices in the shops," Duisenberg said. A weak euro can mean rising prices for goods imported from outside the zone. "It may also undermine the perception of the euro as a stable currency," he added.
The comments did little to revive the staggering currency. The euro fetched ¥96.73 after falling to a record low of ¥95.88 in Asian trading Friday. And the currency traded at $0.8963, after also sinking to new lows against the dollar early this week at $0.8844. The euro is down roughly 24 percent from the level at which it was launched in January last year.
Duisenberg said the ECB, which has been well wary of threats to price stability already, has over the past six months increased interest rates four times. He added that the panel "will continue to do all it can to maintain price stability in the euro area."
Policy moves central bankers can employ to support a currency include raising interest rates - thereby raising the attractiveness of the currency by raising the return on euro-denominated assets - or buying euros in the open market.
On an optimistic note, Duisenberg said euro-zone inflation is now as stable as it has been in decades and said that the currency is likely to rebound due to the strength of the zone's economies.
"This internal stability of the euro means that people can be confident that their savings and pensions will keep their value over time," Duisenberg said. 
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European Central Bank
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