BRUSSELS — European Community finance ministers have agreed to a realignment of the European Monetary System involving a revaluation of the West German, Dutch and Belgian currencies, officials said today.
They said the deal, clinched as major Far East money markets prepared to open for Monday trading, should calm turbulence that strained the EMS last week, sending the value of the French franc tumbling and boosting the mark.
The officials said while the franc and other EMS currencies will remain unchanged, the mark and Dutch guilder will go up by 3% and the Belgian-Luxembourg franc by 2%.
In Paris, a French Finance Ministry spokesman said the realignment revalues the mark and the guilder by 3%, and the Belgian franc by 2%. France "welcomed the agreement with satisfaction," the spokesman said.
Communique to Come
Spanish Finance Minister Carlos Solchaga confirmed that an agreement was reached when he emerged from the Brussels meeting.
West German Central Bank Gov. Karl Otto Poehl described the agreement as a good result.
"It will certainly be welcomed by the markets," he added.
The officials said a communique from the finance ministers' meeting would be issued later, giving details of the agreement.
The accord was reached after more than 10 hours of tough negotiations in which France blocked a politically damaging devaluation of its currency, which had taken a beating in the markets because of persistent labor unrest.
West Germany had until the weekend argued strongly that it was for France to act, in effect calling for a devaluation of the franc.
But diplomats said it was clear early in the negotiations that such a move was impossible for France, leading Bonn to concede a revaluation of its own strong currency despite fears it may anger exporters and farmers shortly before general elections due on January 25.
French Finance Minister Edouard Balladur expressed satisfaction at his success in preventing a franc devaluation.
He said that when France's current troubles were over, his government would continue its fight against inflation and for reducing its budget deficit.
The crisis talks came after central banks were reported to have spent some $10 billion last week to support embattled currencies within and outside the EMS, hit by a shift into marks from a weakened U.S. dollar.
This hurt not only the French franc, but also the Irish punt, Danish crown and Italian lira, all of which will remain unchanged in today's realignment.
Luxembourg Finance Minister Jacques Poos said that it was now up to governments and central banks to defend the new rates.
Central banks are obliged to intervene to shore up their countries if they drift up or down beyond strictly defined limits, a system meant to maintain monetary stability.
The EMS was launched in 1979 to create a zone of monetary stability in the EC, but Britain, Greece and newcomers Spain and Portugal have so far stayed out of its key exchange rate mechanism.
Difficult, Complex Talks
Belgian Finance Minister Mark Eyskens, who chaired the meeting, said the talks had been very difficult and complex but the result should calm down the markets considerably.
He said ministers had asked the EC Monetary Committee of senior finance ministry and central bank officials to draw up proposals for strengthening the EMS.
Eyskens blamed last week's EMS crisis on a shift away from the dollar and the Japanese yen into the West German mark, adding that the new challenge for the EMS was to find ways of handling what he described as this external challenge.
European Commission President Jacques Delors, who speaking at the same news conference as Eyskens, spoke of speculative shift away from the dollar and yen into marks, describing it as a hurricane from outside.
Eyskens said the agreement could ease pressure for higher interest rates in some EC countries.