MADRID (AP) -- The European Central Bank's president, Mario Draghi, said Tuesday it is “inappropriate” and “fruitless” for politicians to push the ECB to influence the euro's exchange rate.
Draghi told journalists in Madrid that there had been “comments about the exchange rate from a lot of people” and that “they are inappropriate if they are meant to instruct the ECB to achieve a certain exchange rate.”
“They are fruitless and frankly increase the confusion around exchange rates and frankly we don't need that,” Draghi said at a news briefing after speaking with members of the Spanish parliament.
French President Francois Hollande last week expressed concern that the euro's recent rise in value would hurt eurozone exports and suggested having an exchange rate policy.
The ECB is forbidden by treaty from taking instructions from politicians. Draghi says the bank doesn't target any particular exchange rate. He said last week, however, that the ECB is monitoring the stronger euro's effects on inflation and the economy _ remarks that currency markets interpreted as a warning the ECB might someday intervene if the euro rises too steeply.
The Group of Seven rich countries issued a statement earlier Tuesday pledging to avoid efforts to deliberately manipulate their currencies lower to achieve trade advantage. A lower exchange rate can help a country's exports. Some observers have discussed the possibility of a destructive “currency war” in which countries compete at trying to devalue their currencies. Concern over the issue has increased since the new government of Prime Minister Shinzo Abe in Japan adopted policies seen as aimed at lowering the yen.
The euro has risen 20 percent against the yen in the past 90 days. But Draghi said that the world was a long way from a currency war. “I think the term currency war is way way overdone,” he said. “We are not witnessing anything like that.”