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ECB's Coeure Says Forex Volatility May Tighten Policy

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Recent moves in exchange rates raise the risk of unnecessarily tight monetary policy, European Central Bank Executive Board member Benoit Coeure said.

“We’ve seen quite some volatility recently,” Coeure said in an interview with Ireland’s RTE, the transcript of which was published on the ECB’s website Wednesday. “If that kind of volatility would lead to an unwarranted tightening of our monetary policy, we would have to reassess and consider.”

ECB President Mario Draghi complained last week about U.S. comments that appeared to welcome a weaker dollar, citing agreements among the world’s biggest economies not to try to use exchange rates for competitive advantage. The euro has gained more than 3 percent against the U.S. currency this year.

“Currency war is always a losing proposition,” Coeure said in the interview. “We want to see exchange rates which reflect economic and monetary policy conditions in difference places and we’re not going to change it.”

“The most important message here is, let’s keep to what we’ve agreed in the relevant fora,” he said.

(ECB corrects transcript of interview to say "our" monetary policy.)
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