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UPDATE 1-Eurogroup chief: main forex rates too volatile

Published 10/15/2010, 10:23 AM
Updated 10/15/2010, 10:28 AM

* Juncker: happy U.S. says strong dollar in its interest

* Eurogroup's Juncker: yen not too strong

* EU's Rehn calls for yuan revaluation

* Eurogroup finance ministers to discuss forex on Monday

(Updates with details, quotes, Rehn's quote)

By Michele Sinner

LUXEMBOURG, Oct 15 (Reuters) - Exchange rates between the main currencies are too volatile, but there are no plans for concerted intervention on foreign exchange markets, euro zone finance ministers' chairman Jean-Claude Juncker said on Friday.

"There is too much volatility between the main global currencies," Juncker said. "The yuan ... is largely undervalued ... and ... is wrong to follow the dollar in all its erratic movements," he said.

He spoke at a panel discussion on Friday as the euro hit 10-month highs against the dollar.

He said there were no plans for a concerted intervention to realign the currencies.

"There is nothing in the pipeline in the way that we would now organise a kind of concerted intervention in the markets. But we are monitoring very closely the monetary situation."

EU Monetary Affairs Commissioner Olli Rehn repeated his call on China to revalue its currency and urged more international cooperation on exchange rates.

"There should be orderly, broad-based appreciation of the Chinese renminbi in relation to all of its trading partners including the euro area," he said in Helsinki.

The Eurogroup's finance ministers will discuss exchange rates on Monday, Juncker said, but added this was nothing unusual. "A debate on currencies and exchange rates is a normal part of our regular meetings."

The euro rose as high as $1.4161, its strongest level since late January, from $1.4092 after Federal Reserve Chairman Ben Bernanke said there was a case for further monetary policy action, given low U.S. inflation and high unemployment.

Juncker said he did not believe the fall in the dollar was a result of a deliberate policy.

"We don't think that for the time being in all the components of the international scenery the exchange rates are reflecting economic fundamentals. But I don't think it is a voluntary U.S. policy," he said.

He added that he welcomed the fact that the U.S. authorities had repeated their declaration that a strong dollar was in the interest of the U.S. economy.

Against the yen, the dollar fell below 81 yen and was last at 81.06, down 0.5 percent. Japanese Prime Minister Naoto Kan was quoted as saying the yen's strength was "extremely excessive" and needs to be halted in the short term.

This raised the possibility of another Japanese intervention on the foreign exchange markets, as in September.

But Juncker said the yen was not too strong.

"There is no dynamic growth in Japan -- this is down to the fact that in the eyes of the Japanese, not in my eyes, the Japanese currency is too strong," he said.

(Additional reporting by Terhi Kinnunen in Helsinki; Reporting by Michele Sinner, Writing by Marcin Grajewski, editing by Timothy Heritage/Rex Merrifield/Ruth Pitchford)

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