By Brian Swint and Jurjen van de Pol Oct. 20 (Bloomberg) -- European finance officials are concerned the euro’s climb to a 14-month high against the dollar is eroding exports as an aide to French President Nicolas Sarkozy called the move a “disaster” for the economy. “Excessive volatility” in currency rates is “bad for economic development,” European Central Bank President Jean- Claude Trichet said in an unscheduled appearance at a press conference late yesterday after a meeting of euro-area finance ministers in Luxembourg. “It’s a problem which worries us,” said Luxembourg’s Jean-Claude Juncker, who led the talks. The euro has gained almost 20 percent against the dollar since February, making the region’s exports more expensive to overseas buyers and threatening the recovery from the worst recession since World War II. U.S. Treasury Secretary Timothy Geithner said on Oct. 3 that it is “very important” for the U.S. to have a strong dollar. Sarkozy’s counselor, Henri Guaino, said today that the U.S. is “flooding the world” with dollars and that the currency’s weakness may become “unbearable.” An exchange rate of $1.50 per euro “is a disaster for the European economy and manufacturing sector,” told a conference in Paris. Eric Woerth, France’s budget minister, said the euro’s gains are hurting the region’s competitiveness. “We all note with considerable attention the statements made by American authorities as regards their support in favor of a strong dollar,” Trichet said in Luxembourg yesterday. ‘Remain Disciplined’ “We want a strong dollar; we need a strong dollar,” French Finance Minister Christine Lagarde said in Luxembourg. “We must remain disciplined” on the message, she said. “The euro is at a strong level and they don’t want to see it rise any further,” said Grant Lewis, an economist at Daiwa Securities SMBC Europe Ltd. and a former U.K. Treasury official. “This is a shot across the bow, but I’m not sure it will be effective. It’s very difficult to turn the tide.” The dollar traded at $1.4968 per euro as of 12:06 p.m. in London, compared with $1.4965 in New York yesterday, after earlier declining to $1.4981, the weakest since August 2008. “We reaffirm a shared interest with our partners of the major floating currencies that we have a solid and stable currency system,” Trichet said. “The eurogroup and the ECB will echo this position, which has been recently repeated by the American authorities.” Trichet and Juncker will go to China with European Union Monetary Affairs Commissioner Joaquin Almunia before year end to discuss currencies, Juncker said. The trio went to Beijing two years ago to push Chinese leaders for a faster “pace of appreciation” of the yuan, a plea that was rebuffed at the time by Premier Wen Jiabao. Chinese Counterparts Juncker, who serves as Luxembourg’s Treasury minister and premier, said yesterday that it was too early to talk about what they would say to their Chinese counterparts this time. “We’re not pre-announcing a message,” he said. Juncker reiterated that the European economy is still too weak to remove record-low interest rates and government spending programs. Governments have committed billions of euros to boost the economy, while the ECB is lending banks as much money as they want for up to a year and purchasing covered bonds in an effort to get credit flowing again. “There are clear signs of recovery, but there’s still a balance between the positive and negative signs,” Juncker said. If new European Commission forecasts due next month show a “genuine recovery,” then stimulus measures should “be gradually withdrawn” starting in 2011, he said. Barely Contracted The euro-area economy barely contracted in the second quarter as Germany and France returned to growth. The region’s gross domestic product will expand 0.3 percent in 2010, the International Monetary Fund forecast on Oct. 1, as it trimmed its estimate for this year’s contraction to 4.2 percent from the 4.8 percent it projected in July. The euro-area finance ministers in Luxembourg were joined today by their colleagues from the rest of the 27 EU nations. They sparred over plans to overhaul financial supervision as the U.K. resisted interim steps, saying a package including guarantees of fiscal independence must be implemented as a whole. “It’s very important we don’t get behind on supervision,” Lagarde told journalists before today’s meeting. “I hope we won’t have a situation where we’re blocked; that’s the risk.” Swedish Finance Minister Anders Borg, who is leading today’s discussions, said he hopes to make progress on financial-supervision plans and proposals for financing measures to combat climate change. Borg said he sees “some of the contours” of an accord on climate-change funding. The U.S., China, the EU and 14 other nations have moved closer to an agreement on the need for more climate aid for the developing world, on how that money will be managed and on how commitments by developed and developing countries will be reflected in an international agreement, U.K. Energy Secretary Ed Miliband said after meetings yesterday in London.

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