ECB Closely Watching Trends in Foreign Exchange, Villeroy Says

The European Central Bank is closely watching trends in foreign-exchange markets and is ready to respond to any possible impact on inflation, Governing Council member Francois Villeroy de Galhau said.

The euro’s ascent against the dollar to levels not seen since 2021 is under the spotlight as it could weigh on prices in Europe just as inflation settles near the 2% goal. While Villeroy stressed that the rally reflects dollar weakness due to US policy uncertainty and has still left the common currency near long-term averages, he said officials are on alert.