The big economies should not use exchange rates to increase their competitiveness, and discussions between politicians about currencies should be restricted to official forums, according to Benoît Coeure, who is a Member of the Governing Council of the European Central Bank. According to him, the last thing the world needs is a currency war.
“We see a lot of volatility at the moment that comes from different assertions, but that is not helpful”, added Benoît Coeure. However, he explained that, if it came to more serious consequences, monetary policy would have to be reevaluated.
The comments of Benoît Coeure came after the US dollar fell to nearly three-year low against the Euro last week. The reason was the US Finance Minister Steven Mnuchin’s statement that the weaker US currency is good for the country’s economy, at least in the short term.
A day later, the exact opposite stance was expressed by US President Donald Trump. He said the dollar would be strengthened during its reign because of the good economic performance of the country and that Steven Mnuchin’s speeches were misinterpreted.
Following the last meeting of the European Central Bank, the Governor Mario Draghi warned that the bank would monitor the single currency because of its possible impact on the medium-term outlook for price stability.