Euro strength poses headache for eurozone ministers

Dutch Finance Minister Jeroen Dijsselbloem holds his first eurozone meeting Monday just as hard-won measures to stabilise the bloc pose a different problem -- a strong euro dampening the economy. The debt crisis Dijsselbloem inherits has eased greatly since the European Central Bank vowed last year to intervene in the markets to tame borrowing costs and EU leaders agreed tough steps to bolster the euro\'s defences. But after months when it seemed the single currency\'s future was in doubt, the euro has now risen sharply, sparking fears it could make eurozone exports less competitive and so undercut badly needed growth. France especially has voiced its concerns as Japan, a major EU trading partner, forces down the yen to make its exports cheaper. French Finance Minister Pierre Moscovici called last week for a debate on the euro\'s exchange rate and wants the eurozone to consider setting a target level, which the ECB would then have to defend. Markets cannot be relied on to determine a fair value for the euro, French President Francois Hollande argues. But Germany, Europe\'s paymaster, and the ECB are uncomfortable with such talk given that the central bank\'s mandate is to ensure price stability, not manage the forex markets. Many analysts noted how a cautious ECB head Mario Draghi tried to \'talk down\' the euro last week with very guarded comments on the economic outlook And to some extent he succeeded. Several of the eurozone finance ministers will likely be taking up the issue again later in the week when the Group of 20 meets in Moscow and as the subject moves up the international agenda amid fresh talk of a \"currency war.\" Dijsselbloem has several other difficult issues on his plate: a Cyprus debt bailout, continued weak growth and political uncertainty ahead of elections in Italy and Germany. Cyprus, which also goes to the polls shortly, has asked for help to the tune of some 17 billion euros, equal to its annual economic output, but there are deep misgivings about its banking system and money laundering. If the sums involved are relatively small -- Greece needed some 240 billion euros in direct aid -- letting Cyprus fail could badly compromise the credibility of the euro, threatening the recent progress made. An EU official said Monday\'s meeting would review the situation but no accord is expected until a new Cypriot government is formed in March. Ministers will likely also review progress on the key measures agreed last year -- a single regulator for the banks and the working of the European Stability Mechanism, the bloc\'s defence back-stop. Officials say ministers will also honour respected former eurogroup head Jean-Claude Juncker of Luxembourg who served for eight years, stepping down in January after overseeing a difficult overhaul of the euro\'s shaky foundations. The 17 eurozone finance ministers are joined by their 10 non-eurozone colleagues for a meeting on Tuesday.