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Russian President Medvedev Warns Against Cut in Euro Area’s Size

Bloomberg Businessweek

By Ilya Arkhipov
© Photo: RIAN, Ekaterina Shtukina

The euro region reducing the number of its members may cause “irreparable damage,” Russian President Dmitry Medvedev said.

“If the number of euro zone countries is reduced, it does not mean it will make the euro a more stable currency,” Medvedev told chief executive officers on Nov. 12 at a summit as part of the Asia-Pacific Economic Cooperation forum in Honolulu. “We are fans of the euro and of the euro economy.”

Europe’s sovereign-debt crisis and its consequences for the global economy were among the topics discussed at the APEC summit. Delegates also debated on the future of the euro as a reserve currency. U.S. President Barack Obama said it’s important for Europe to stand behind individual members of the euro region to resolve the economic turmoil.

European leaders agreed last month to leverage their 440 billion-euro ($605 billion) rescue fund to give it more than 1 trillion euros as they work to prevent the spread of the two- year old crisis from engulfing Italy and Spain. Russia is seeking an increase in the weight of developing nations in the International Monetary Fund after the IMF pledged to assist the euro region.

Russia is watching the fate of the euro as almost half of its currency reserves are in euros, Medvedev said.

Euro Pares Loss

The euro rose from a one-month low versus the dollar amid optimism European leaders are tackling their debt crisis after Italy’s Senate approved an austerity bill and Greece swore in a new prime minister.

The 17-nation currency pared a weekly loss versus the dollar to 0.3 percent as Italian bonds rose, pushing yields below the 7 percent level that led Greece, Ireland and Portugal to seek bailouts. The euro fell earlier on concern the debt crisis was worsening and before data this week that may show the region’s economic growth stagnated.

The euro declined versus the dollar to $1.3750 on Nov. 11, from $1.3792 on Nov. 4, after rallying 1.5 percent in the previous two days. It touched $1.3484 on Nov. 10, the weakest level since Oct. 10. Europe’s shared currency slid 1.7 percent against the yen to 106.10, its biggest weekly loss since the five days ended Sept. 23.

Post-Crisis World Institute