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Joaquin Almunia was relatively cautious in his comments on 27 February on the euro's new all-time high against the US dollar (the single currency has now capped the rate of 1.50 euro to the dollar). The commissioner for economic and monetary affairs said that "excessive volatility" on foreign exchange markets was "not welcome". Almunia was borrowing here from the well-known official discourse that has been repeated for months by the G7 and international financial institutions. He was careful to point out that the exchange rate for the single currency was determined by the "law of supply and demand". Last October, when the dollar had already declined sharply, Almunia was far more...

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