AFP, Paris :
France’s Socialist Prime Minister Manuel Valls called Wednesday for a “European exchange rate policy” as the euro shot up further on shifting monetary policy expectations.
“The eurozone can not be the adjustment variable in exchange policies of other large monetary zones,” Valls told a cabinet meeting.
The policy should “respect, of course, the independence of the European Central Bank,” he added.
Nations targeting exchange rates is a sensitive subject, with developing countries having accused advanced countries of waging “currency wars” in recent years as they sought to stimulate their economies with interest rate cuts or massive quantitive easing (QE) programmes.
Such measures often significantly impact foreign exchange markets — intentionally or not.
Exchange rates have whiplashed in recent months as the ECB launched its QE programme while the US Federal Reserve considers raising interest rates after having kept them at near zero for years and having run its own QE programmes.
The euro slid from around $1.25 in mid-December to just under $1.05 in March, but it leapt back above $1.13 on Wednesday as investors speculate the ECB may terminate QE sooner than expected amid modest rises in inflation and growth levels and worries the US Fed may push back interest rate hikes as the US economy nearly stalled in the first quarter of the year.
France’s Socialist Prime Minister Manuel Valls called Wednesday for a “European exchange rate policy” as the euro shot up further on shifting monetary policy expectations.
“The eurozone can not be the adjustment variable in exchange policies of other large monetary zones,” Valls told a cabinet meeting.
The policy should “respect, of course, the independence of the European Central Bank,” he added.
Nations targeting exchange rates is a sensitive subject, with developing countries having accused advanced countries of waging “currency wars” in recent years as they sought to stimulate their economies with interest rate cuts or massive quantitive easing (QE) programmes.
Such measures often significantly impact foreign exchange markets — intentionally or not.
Exchange rates have whiplashed in recent months as the ECB launched its QE programme while the US Federal Reserve considers raising interest rates after having kept them at near zero for years and having run its own QE programmes.
The euro slid from around $1.25 in mid-December to just under $1.05 in March, but it leapt back above $1.13 on Wednesday as investors speculate the ECB may terminate QE sooner than expected amid modest rises in inflation and growth levels and worries the US Fed may push back interest rate hikes as the US economy nearly stalled in the first quarter of the year.
