PARIS (MNI) – The euro is returning toward more normal levels,
which will support exports, ECB Governing Council member Christian Noyer
said Thursday.

The governor of the Bank of France dismissed reports that China
intended to divest itself of Eurozone debt holdings and criticized the
markets’ reaction to such “rumors.”

Asked in a television interview about the slide of the euro’s
exchange rate, Noyer said, “it is clear that today we are in a zone
which is close to the long-term average, thus a zone which is more
normal.”

“This will certainly help us in the sphere of foreign trade,” he
added. “It’s the case for the entire Eurozone.”

Noyer said he had “never encountered concerns” among Chinese
officials about their investments in the Eurozone.

“Today, one has the impression that financial markets are so
nervous that any sort of rumor that is spread provokes movements in
financial asset prices,” he said. “It’s all a bit ridiculous.”

“I hope that we will very soon return to a period of calm” in the
markets, he said. “We must stop believing every rumor.”

Noyer explained the decision of the ECB to buy government bonds as
a “very pragmatic” solution to the “disorganization” of financial
markets during the peak of the sovereign debt crisis. “It seemed to us
the best way to restore the so-called ‘mechanism of transmission'” of
monetary policy, he said.

The state of public finances in a number of countries is “not good”
today, Noyer observed. “Everywhere, the means must be found to restore
in a credible way the balance of public finances, while trying to
maintain growth” at the same time, he said.

For France “what is important is to demonstrate to all markets,
market players, rating agencies — everyone who evaluates the
sustainability of French public finances — that we have the means and a
credible plan to return to balance and to reduce debt to levels that are
much more normal,” he said.

Otherwise, “we will be obliged to have austerity policies,” he
warned. “But that is not the case today.”

–Paris newsroom +331 4271 5540; e-mail stephen@marketnews.com

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