ECB Nowotny:No Reason To Be Worried About Recent Euro Decline 5  FEB   BERLIN - The recent decline of the euro on global foreign exchanges is no reason to be worried, European Central Bank Governing Council member Ewald Nowotny said in an interview with Austria's public ORF radio, aired Friday. BERLIN (MNI) - The recent decline of the euro on global foreign exchanges is no reason to be worried, European Central Bank Governing Council member Ewald Nowotny said in an interview with Austria's public ORF radio, aired Friday. "There exists no worrying development," he asserted, adding that the current euro foreign exchange rate "is in a normal band." Nowotny, who heads the Austrian National Bank, noted that "we have been worried for a long time about an overly strong appreciation of the euro which would impact negatively on our exports and, in turn, on growth." The euro dropped sharply Thursday in hectic trading, as markets fretted about the difficult fiscal positions of some eurozone member states, including Greece, Portugal and Spain. The euro dropped below $1.38 Thursday and opened in Europe just barely above $1.37, before slipping below that level as well. Late last year, the single currency appeared unassailable, soaring as high as $1.51 at one oint, which caused plenty of teeth gnashing in eurozone circles. Nowotny asserted that the impact of Greece's financial woes on the euro's foreign exchange rate "is minimal." He said, "one cannot speak of a burden for the euro." Rather, the eurozone's economic situation coupled with "speculative aspects" are driving the euro's rate, he said. Still, Nowotny acknowledged that "naturally, the Greek situation is also discussed on the European level and one has to say that the European Commission and the ECB are taking this problem very seriously." Other countries like Ireland have managed to reign in their deficits using "massive and energetic measures," Nowotny pointed out. This has been rewarded by markets, and yields on Irish government bonds have gone down, he said. "This is exactly what's expected now also from Greece," he said. Asked if the eurozone could break up over mounting deficit problems, Nowotny cited ECB President Jean-Claude Trichet's recent remarks that such a notion was "absurd." "The eurozone itself is surely not endangered," Nowotny said. "However, in the interest of the [EMU] states...the deficits must be reigned in." The Governing Council member denied that a stronger role for the euro in the global economy is endangered by its current problems. "The question of the position of the euro in the global economy is a long-term matter where long-term trends matter," he argued. He pointed out that the United States posted a long-term current account deficit while China had a massive surplus, and the eurozone was roughly in balance. "These are the fundamental factors" determining the global role of the euro, Nowotny reasoned. "We are seeing that the role of the euro will tend to grow." As long as the U.S. does not manage to reduce its current account deficit there will always be a certain critical judgement of the dollar, the central banker said. However, due to the dollar's strong position in capital markets "no abrupt changes are to be expected," he said. --Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com [TOPICS: M$X$$$,MT$$$$,M$$EC$,M$$CR$,MGX$$$,MFX$$$,M$$FX$] 2/5/2010 7:42:00 AM