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UPDATE 1-ECB's Sramko says strong euro may hurt economy

Published 10/23/2009, 05:31 AM
Updated 10/23/2009, 05:33 AM

* ECB's Sramko says strong euro may hurt euro zone

* Sramko says exchange rates need more coordination

(Adds quotes, background)

SMOLENICE, Slovakia, Oct 23 (Reuters) - More coordination is needed on global exchange rates because the strength of the euro could start harming the euro zone economy, European Central Bank governing council member Ivan Sramko said on Friday.

His comments came amid intensifying debate over the weakness of the dollar, which has fallen about 20 percent against the euro since March and about the same against the Chinese yuan, making those countries' goods more expensive in dollar terms.

"The dollar is currently weak... The trend is clear and apparent, the strong euro can start causing problems to the euro zone," Sramko, the governor of Slovakia's central bank, told reporters on the sidelines of a conference.

"It is needed to coordinate activities in the exchange rate area more," he said.

On Monday, the ECB President Jean-Claude Trichet repeated the bank's view that it had no reason to doubt statements from U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke that a strong dollar was in U.S. interests.

The euro was trading at $1.503 on Friday morning.

Sramko said there were positive signals in the economy and that was reflected in the ECB's policy stance.

"Risks to the economic development still exist, but there are positive signals ... In this light we consider monetary policy settings as appropriate," Sramko said.

But he added that non-standard measures taken by the bank to boost liquidity could stretch beyond this year.

"This cannot be ruled-out, it is absolutely open," he said.

"It will depend on how we will evaluate the situation, and on expectations of further development." (Reporting by Martin Santa, writing by Jan Lopatka; Editing by Toby Chopra)

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