Le Pen Says Her New Franc Would Fluctuate on Currency Markets

  • Presidential candidate has changed views on handling euro exit
  • Le Pen says weaker franc would help competiveness with Germany

Crossbridge's CIO Says Markets Underestimate Le Pen Risk

Presidential candidate Marine Le Pen has repeatedly said the euro is bad for France but she hasn’t always been consistent about what she’d do about it.

On Wednesday, she said she’d introduce a new franc at a rate of one-to-one to the euro and then allow it to fluctuate, even though she and her aides previously said any new national currency would continue to be pegged to a basket of currencies.

Marine Le Pen, France's presidential candidate and leader of the French National Front, speaks during the National Federation for Public Works conference in Paris, France, on Thursday, Feb. 23, 2017. Independent presidential candidate Emmanuel Macron agreed to a key alliance to boost his campaign while Le Pen brushed off charges against her head of cabinet in a roller-coaster French election that has exactly two months to run until the first round of voting. Photographer: Jasper Juinen/Bloomberg
Marine Le Pen.
Photographer: Jasper Juinen/Bloomberg

Speaking on RTL radio, Le Pen said the new franc would likely fall against whatever currency Germany uses, making French car exports more competitive, but said it might rise against the currency in Italy, a country she said would also be better off without the euro.

Le Pen’s views on the issue have fluctuated throughout the campaign. At first she wouldn’t even say she proposed leaving the common currency, instead talking about restoring “monetary sovereignty.” She’s recently talked more openly about leaving the euro, but without many details on how it would be done. In her RTL interview, Le Pen wasn’t clear if she envisioned a completely free or controlled float.

‘Economic Pretensions’

"Monday she’s out of the euro, Tuesday she’s not, Wednesday she pegs, Thursday she fluctuates,” said Patrick Artus, chief economist at Natixis Securities. “It’s nonsense and it will never be implemented. We have to stop taking her economic pretensions seriously.”

Le Pen left room for interpretation on the euro when she unveiled her 144-point program a month ago, saying she’d “return to monetary sovereignty” without mentioning the euro. An adviser explained at the time that the new franc would be pegged to a basket of currencies comparable to the European Currency Unit, which preceded the euro.

To read about Le Pen’s plan to break up the euro, click here.

Last week, in a speech about economic policy, she was more explicit about leaving the euro, and at a conference with a French business lobby in Paris Tuesday she said the single currency “was unsustainable because the discrepancies” between member states are too wide.
 
She denied that leaving the euro and imposing what she calls “intelligent protectionism” would cut off trade, saying France traded better before joining the European Union. “If I want a new national money, it’s to help us set off to conquer the world,” she said. She didn’t mention France’s debt Wednesday, but in the past has said it will be denominated in the new currency.

Latest Polls

Le Pen has consistently pledged to revoke the central bank’s independence to allow her to print more of the new currency to fund her policies.

Polls over the past month have shown that Le Pen would win the most votes in the April 23 first round of the presidential election but heavily lose the May 7 second round against independent Emmanuel Macron. Tuesday’s daily Ifop poll put her at 26 percent and Macron at 25 percent in the first round, with Macron winning the run-off 61.5-38.5 percent.

On RTL, she attacked Macron as “a pure product of the banking system, of savage globalization.”

In the two-hour interview Wednesday, she also said she’d keep the Fessenheim nuclear power plant open and maintain tax advantages for diesel cars, saying pollution in France was more due to wind carrying emissions from German coal power plants. Asked about International Women’s Day, she said the main challenge facing women in France today is the rise of Islam.

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