ECB’s Nowotny: Strong EUR Here To Stay

There is no reason for the European Central Bank to intervene and weaken the euro’s exchange rate, which is weighing on some euro zone economies, ECB Governing Council member Ewald Nowotny told news agency MNI on Tuesday.

The stronger euro, which has climbed more than 8 percent against the dollar since early July, is complicating the ECB’s policy puzzle and Governing Council members are at odds over how to respond.

The euro rose close to an intra-day high after Nowotny’s comments in the interview, in which he also said the impact of another interest rate cut would be limited. There was, however, room for manoeuvre in terms of liquidity provision.

“Of course we do not welcome the appreciation, and I’m also aware that the strengthening of the euro has an especially negative impact on the weaker economies and might therefore increase the economic divergence,” Nowotny said.
“But I do not see any instruments we could use against it, and I also don’t see that the problem has reached a dimension requiring a response. So we have to live with it.”

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