France in currency row

Press, 21 March 1983, Page 6

France in currency row

NZPA-Reuter Brussels The future of the troubled European Monetary System hangs in the balance as European Community Finance Ministers prepare to resume hard bargaining over the values of their currencies. Several weeks of turbulence in the foreign ex-

change markets have critically weakened the French franc and other fragile currencies in the E.M.S., bringing open conflict with West Germany over the resulting benefits for the mark. France has threatened to withdraw its franc from the

E.M.S if the mark is not substantially revalued to ease the pressure against the franc. The French Finance Minister, Mr Jacques Delors, told journalists as he emerged from eight hours of inconclusive talks that he

could still not rule this out.

But West Germany stood firm, apparently determined to avoid carrying the bulk of the burden in any realignment of the eight E.M.S currencies, diplomats said. The West German Finaife Minister, Dr Ger-

hard Stoltenberg, whose turn it is to chair the Ministerial session, told journalists that the talks were difficult but he still hoped for an accord when Ministers resumed their discussions today. The _ diplomats said Franc"/was insisting that it would only devalue the franc if the other weak currencies in the system were also devalued.

It was also unwilling to cut the value of its franc by more than 2 per cent, demanding at the same time a 6 per cent rise in the value of the mark, they saitE

The 8 per cent change in parities was at the lower end of the range considered acceptable by virtually all the States involved, but the problem was how far each currency should move up or down from the central E.M.S. rate. The diplomats said they could not see how the Germans could accept the French proposals, which were backed by strongly

critical remarks inside and outside the meeting by Mr Delors, who called the German Government arrogant and blamed it for France’s huge trade deficit.