Greek enters European exchange rate mechanism

The European Union's monetary committee has admitted the Greek currency, the drachma, into the European exchange rate mechanism, the ERM -- allowing Greece to move closer to joining the planned single European currency.

The commitee effectively devalued the drachma by fourteen per cent to let it enter.

The Greek government has endorsed the measures.

A BBC economics correspondent says Greece will not sign up to the single currency when it's launched next January, but two years of stable ERM membership could make joining more realistic early next century.

Greece was the only one of the twelve EU countries wishing to join the single currency which failed to meet the entry criteria last month.

Our correspondent says a devalued drachma will make imports dearer in Greece, increasing inflation.

He says there's also a risk of a long-term rise in unemployment.

At the same meeting, the EU's monetary committee revalued the Irish currency, the punt, by three per cent.

From the newsroom of the BBC World Service