Brussels, 12/02/2013 (Agence Europe) - After the ECOFIN Council meeting in Brussels on Tuesday 12 February, Euro Commissioner Olli Rehn said that international coordination was required to avoid competitive currency devaluations. He was speaking ahead of the G20 Finance summit in Moscow at the end of the week, adding that he expected leading world economists to commit in Moscow to stable exchange rates set by market forces and reflecting the fundamentals of the global economy.
Rehn said that the euro exchange rate was broadly in line with its medium-term average, but a strong euro caused problems for struggling economies in southern Europe because their exports are more sensitive to price variations.
In a press release on Tuesday, the G7 (the United States, Canada, France, Germany, Italy, Japan and the United Kingdom) made similar comments, saying that their central banks were not trying to weaken their currencies with monetary measures but simply trying to sustain demand.
On Monday, the head of the Eurogroup, Jeroen Dijsselbloem, the current debate on the strength of the euro was a legitimate one, but said that the place for discussions of this nature was at the G20 in Moscow. He refused to give his own opinions about the euro exchange rate, making it a point of honour not to comment on exchange rates.
Debate about the impact of the recent rise in the value of the euro was launched by the French president, Francois Hollande, last week at the European Parliament (see EUROPE 10779). French Economy Minister Pierre Moscovici said on Monday that the rise was a positive sign first and foremost, but was also due to more aggressive exchange rate manipulation. He said it was essential for the euro exchange rate to reflect economic fundamentals and not be subject to erratic fluctuations and therefore called for a coordinated approach to exchange rate policy at the G20.
Germany takes a different line, calling for a strong euro. German Finance Minister Wolfgang Schauble said that exchange rates must not be manipulated, but there wasn't a problem with the euro exchange rate although there were concerns about other big currencies. (MB/transl.fl)