French President François Hollande called on the Euro zone on Tuesday to develop an exchange rate policy to help protect the common currency from “irrational movements”. His comments came amid growing concern that the Euro, now trading around 1.35 to the U.S. dollar, is too strong and could undermine the country’s exporters and hence wider economic growth.
Hollande said that competitiveness reforms under way in many Euro-zone countries including France risked being undermined by the Euro exchange rate with key trading partners, but he stopped short of calling for exchange rate targets.
“Europe… is leaving the Euro vulnerable to irrational movements in one direction or the other,” he said in his first speech as president to the European Parliament in Strasbourg. “A monetary zone must have an exchange rate policy or else it ends up being subjected to an exchange rate that does not match the true state of its economy.” Read more here.
Date: February 7, 2013