German Chancellor Angela Merkel’s junior coalition partner warned on Saturday against efforts to talk down the euro, saying a weaker currency would stoke inflation and hurt ordinary Europeans.
“There is a new danger in Europe – that is the discussion about whether it would be better to weaken the currency instead of strengthening competitiveness,” Philipp Roesler, leader of the pro-business Free Democrats (FDP), told his party.
“We believe that trying to exert political pressure on the European Central Bank (ECB) is disastrous,” he said.
France and some other euro zone states fear that a strong euro will hurt their exporters and snuff out the growth they need to create jobs and restore their public finances.
French President Francois Hollande called last month for a mid-term target for the euro exchange rate but ran into immediate opposition from Berlin.
The euro has been relatively firm since the ECB vowed last summer to do whatever is necessary to save the currency, despite persistent concerns among investors over Europe’s stagnant economy and political challenges such as the rise of populist, anti-austerity parties, most recently seen in Italy’s election.
Some countries such as the United States and Japan have been accused of using monetary policy to shape currency movements.
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