Luxembourg Finance Minister Luc Frieden said the euro’s level doesn’t concern him at present and its strength follows the economic reality of the euro area.
“I think this reflects the fundamental data of the European economy and I highlight that a year ago we thought that the euro was incredibly weak,” Frieden said in an interview late yesterday after an event in Zurich. Asked on whether he was concerned about the currency’s strength, he said: “no.”
Frieden’s comments contrast with the tone of Luxembourg’s neighbor, France, whose President Francois Hollande called earlier yesterday for government leaders to steer the euro’s exchange rate. The currency rose to a 14-month peak against the dollar this month and the highest in almost three years against the yen, making it harder for exporters to sell goods abroad.
The euro, which extended gains against the dollar after Frieden’s comments last night, today weakened against the U.S. currency, declining 0.4 percent to $1.3526 at 8:03 a.m. in London.
“I think that this discussion shows that we have achieved a lot and that this always should be a topic of discussion in the G-7 countries, but there’s no special concern at this stage,” Frieden said.
The minister’s comments also differ from those of Luxembourg Prime Minister Jean-Claude Juncker. On Jan. 15, when he was still head of the euro group of finance ministers, Juncker said that the 17-nation currency was “dangerously high.”
Asked on whether talk of currency wars is an exaggeration, Frieden said: “absolutely.”
Hollande yesterday cautioned against allowing market to determine the level of the euro without international action.
“We can’t let the euro fluctuate according to the mood of the market,” Hollande told reporters at the European Parliament in Strasbourg, France. “We have to act at the international level to assert our interests,” he said.
The French president also said that there’s a need to “determine for the medium term an exchange-rate level that appears most realistic.”