EU Finance Ministers meeting here yesterday maintained their policy of not issuing formal statements on exchange rates. Nonetheless the Finnish Finance Minister, Mr Sauli Niinisto, said earlier there were quite natural reasons for the euro's weakness against the dollar, citing the strength of the US economy relative to Europe's.

The French Finance Minister, Mr Dominique Strauss-Kahn, provided some encouragement for the euro, saying that Italy and Germany's budget situation had improved in recent weeks and Italy's fiscal outlook was more reassuring.

Speaking in the open session of the meeting on the Presidency's programme, the Minister for Finance, Mr McCreevy, reiterated his commitment to reinforced economic policy co-ordination but warned of the dangers of the process being bogged down by paperwork. He urged the streamlining of procedures to make the system more understandable to citizens.

In response to questions about the threatened Commission freeze on Irish structural fund applications unless environmental obligations were met, Mr McCreevy insisted that Ireland would comply with the Habitats directive.

"I would be concerned at any threat to the draw-down of structural funds arising from non-compliance," he said, "but I am assured by my colleague the Minister for Arts, Heritage, the Gaeltacht and the Islands, Ms de Valera, that the problem will be worked out."

The Government has been warned by the Commission that its failure to list sites for special protection under the directive means that projects for funding under Agenda 2000 cannot be assessed for compliance with environmental standards and will thus go on hold.