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Putin confident in euro despite debt crisis

By Juergen Baetz

Associated Press

Published: Friday, Nov. 26 2010 7:10 a.m. MST

BERLIN — Russia's Prime Minister said Friday he was confident in the euro despite Europe's swelling debt crisis and criticized the dollar's dominance as a world reserve currency.

Vladimir Putin said that despite the problems in some heavily indebted eurozone countries the euro has proven itself as a "a stable world currency," and he called to strengthen its global role.

"We have to get away from the overwhelming dollar monopoly. It makes the world economy vulnerable," he told a gathering of business leaders in Berlin through a translator.

Still, the 16-nation common currency slipped below $1.32 in afternoon European trading due to worries that the debt crisis could spread from Ireland to Portugal and Spain.

Putin said he was confident the euro would outlast the challenges brought by the sovereign debt crisis, praising the policy of the European Central Bank and the eurozone member states to preserve the currency.

Asked about the possibility of Russia one day adopting the euro as a currency, Putin did not rule out such an option. "The rapprochement of Russia and Europe is inevitable," he said.

In his call to reduce the dollar's dominance in the world economy, Putin noted an agreement signed this week with China to use their respective currencies, the ruble and yuan, for bilateral trade in the future.

Deutsche Bank AG's chief executive Josef Ackermann echoed those comments, saying "I think it is completely accurate that we have to reduce the currency system's dependence from one dominant currency such as the dollar."

Ackermann added that once Europe has done its homework following the current crisis, an inclusion of Russia in the bloc's currency zone would be "in Europe's own interest" if an enlargement takes place.

As worries lingered over the sovereign debt of Ireland, Portugal and Spain, however, the euro continued its slide against the dollar on Friday.

After hitting $1.3199, it rose slightly to $1.3206, still well below $1.3290 the day before. The British pound slipped to $1.5619 from $1.5752 on Thursday, while the dollar rose to purchase 83.86 Japanese yen from 83.63 the day before.

Ireland on Sunday asked for a massive loan from the EU and IMF, as Greece did in May. Investors are anxious that other countries, chiefly Spain and Portugal, will also have to seek aid as their borrowing costs soar.

Markets were also jittery after North Korea warned that U.S.-South Korean plans for military maneuvers put the peninsula on the brink of war.

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