-Caveat Lector- ECB's Liebscher `Not Concerned' About Euro's Slide vs Dollar Bloomberg News Apr 16 1999 7:10AM ET ECB's Liebscher `Not Concerned' About Euro's Slide vs Dollar Vienna, April 16 (Bloomberg) -- European Central Bank council member Klaus Liebscher said he isn't concerned about the euro's fluctuating exchange rate against the dollar, even as Europe's four-month-old single currency sinks to its lowest level since its inception. Though the euro sank to as low as $1.0622 in London trading today, the lowest since it first began trading at $1.16675 on Jan. 4, Liebscher, the Austrian National Bank governor, said ``psychological factors'' and concern about ``how economies are performing'' are commonplace in exchange rates between two currencies. ``I'm not really concerned about the exchange rate because we more or less have the same situation that the dollar-yen had last year,'' Liebscher said. ``We will watch it carefully, but one should not be too concerned about the development in the exchange rate. It's not the goal of the ECB council.'' The euro slid to a new low against the dollar today, as hopes for an end to the war over Kosovo faded after U.S. President Bill Clinton warned attacks on Yugoslavia would intensify. While ECB officials say the euro's development is no cause for concern, analysts say the ongoing conflict will be costly to European governments and could hurt Eastern European economies. Even so, some commentators point out that a less valuable euro can encourage Western European growth by making products less expensive for customers abroad. ``The lower exchange rate is an indirect sponsorship program for the European economy,'' Johannes Farnleitner, the Austrian Minister for Economic Affairs, said today. ECB's Contribution While Liebscher downplayed concerns about the European economy, he added the ECB council did its part for the euro bloc's growth by cutting its benchmark refinancing rate half a percentage point to 2.5 percent last week. He said it's now up to each government to change economic policies in line with the euro countries' so-called stability pact, which is intended to reduce government deficits and debt. ``The prime goal for me is that policy makers really stick to the stability pact...and reach balanced budgets or even surpluses,'' said Liebscher, attending the launch of an education package to boost schoolchildren's awareness of Europe's single currency. Governments ``are forced to, and they should, speed up structural reforms like deregulation, getting rid of bureaucracy, and creating new jobs in respect of new enterprises,'' he said. Liebscher highlighted the importance of tackling unemployment in the euro 11 countries, though said he was satisfied with Austria's own jobless rate. Austria's Low Unemployment ``The Austrian situation itself is quite different because we have an unemployment rate of 4.2 percent, which is, fortunately, one of the lowest rates within the European Union,'' he said. ``But on the other side, according to national standards, it's rather high.'' Austria's coalition government last month agreed on a 30 billion schilling ($2.4 billion) tax package aimed at boosting consumer spending, encouraging companies to invest and creating more jobs. ``I'm convinced we've already seen certain improvements in the last two or three months, so the situation here is improving,'' Liebscher said. Austria, which with 3 percent of the euro bloc's output is the area's seventh-largest economy, also announced plans at the start of the year to continue posting budget deficits in a four- year deficit-limitation plans. Reducing Speculation Liebscher said last week's ECB interest rate reduction, the size of which surprised many economists, was aimed at bolstering growth in the region and stamping out speculation about further rate cuts in the future. While the central bank's independent reputation may benefit from springing ``surprises'' on the market, he said, the decision was based wholly on policy, since ``we are faced with a quite favorable outlook for price stability on the one side. And this was, of course, our main basis for that decision.'' The European Commission forecast last month that economic growth in the euro 11 may slow to 2.2 percent in 1999, from 3 percent last year. ``This is a realistic outlook but optimistic on the other hand because they say it's more or less a temporary development and we will see the situation recover next year,'' Liebscher said. ``I also share the feeling that we have seen a robust economy internationally -- we have improvement in some of the Asian countries and a stabilizing situation in Latin America. So I think the international environment is quite favorable for the future,'' Liebescher said. Liebescher is one of 17 members of the ECB Governing Council, which meets twice a month to discuss monetary policy and interest rates for the 11 countries that adopted the euro common currency. The council next meets on Thursday. 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