The Hindu Business Line : Some Asian currencies not flexible, says ECB's Noyer

BIENVENUE: The Governor, Banque de France, Mr Christian Noyer (right), with the Adviser, Merrill Lynch & Co Ltd, Mr B.D. Narang, at a luncheon meeting with CII members in the Capital on Friday. - Ramesh Sharma

New Delhi May 18 Lack of flexible exchange rates among a few Asian countries is leading to excessive accumulation of reserves in these countries, which does not seem to be sustainable in the medium term, the European Central Bank Governing Council member, Mr Christian Noyer, has said.

"The major concern we have today is with few currencies especially in Asia (does not concern India), where the lack of flexibility is leading to excessive accumulation of reserves," Mr Noyer, who is also the French central bank Governor, said at an industry gathering organised by the Confederation of Indian Industry (CII).

He said these countries are being encouraged to progress as rapidly as possible towards greater flexibility.

"This is required to help better equilibrium among major economies and reduce global imbalances," he said.

Mr Noyer, who was on a weeklong official visit to India, met the Finance Minister, Mr P. Chidambaram, later in the day.

UK adopting euro

On the question of UK adopting euro as its currency, Mr Noyer said "we very much hope they would join us as soon as possible".

Asked whether he sees the euro supplanting the US dollar as the main reserve currency at any point, Mr Noyer said that he would not like to make projections of that kind.

"International monetary and financial system will benefit from better balance between several major currencies. The way it is organised, it's quite good," he said.

He also highlighted that this was also good thing for international financing by major companies in the world which have the possibility of raising funds in not only one currency but also in several from deep and liquid markets.