LONDON (Reuters) - French President Nicolas Sarkozy said on Thursday that the euro was too strong and questioned whether current monetary imbalances were sustainable.
“When I was a student, I was taught that a strong economy has a strong currency,” Sarkozy said in a speech at a dinner in London’s financial district that ended his two-day state visit .
“What do I see today? The opposite. The dollar has never been so weak, the yuan is as weak as ever, the yen is the same. And the euro, which has too weak growth, is at too high a level.”
“Who can believe that the monetary imbalances which led to today’s situation can persist?” he asked.
Sarkozy, for part of last year, was an isolated but vociferous critic of the euro’s rise on the foreign exchanges.
However, more and more European countries have expressed similar concerns about the damage the strong euro risks inflicting on exports as the single currency has risen further and further, hitting a record high above $1.59 (79 pence) last week.
The euro accumulated gains of more than 12 percent against the dollar in 2007 and another 8 percent so far this year.
Sarkozy, who departed from his prepared text, also took aim at credit rating agencies, which have been criticized by many investors for failing to act earlier to lower some ratings.
“Who can imagine that it is normal that international rating agencies can rate certain financial products AAA on a Friday and the same financial products, rated by the same agencies, become BBB on the Monday?” Sarkozy asked.
“I don’t want that kind of capitalism, because it’s the capitalism of frivolity, of lies and of lack of transparency,” he said.
Apparently referring to the U.S. sub-prime crisis, Sarkozy said: “Who can think that you can sustainably earn money on debts and push along a mountain of debt without ever wondering who will repay it one day, even if you are the world’s leading economy?” he said.
Reporting by Adrian Croft and Sophie Louet in London and Swaha Pattanaik in Paris; Editing by Leslie Adler