ECB chief rejects forex debate outside of G7
Friday, 13 July 2007
STRASBOURG, July 12 (AFP): European Central Bank (ECB) President Jean-Claude Trichet urged governments yesterday to reserve their opinions about foreign exchange rates for Group of Seven (G7) meetings.
Speaking to members of the European Parliament, Trichet said: "We are in a floating exchange system and we have a way to discuss those matters, which is the G7."
Currently, G7 members discuss exchange rates in regular meetings, but French President Nicolas Sarkozy has called for a more pro-active approach to currency rates from Europe, judging that the euro is unfairly overvalued.
"It is not to say that the situation is easy, it not to say that the situation is very nice, but I would say ... let's be as responsable as possible in the current circumstances and let's be sure that we have this dialogue between us and our partners," Trichet said.
Trichet has come under fire from France's rightwing leader, who has said the ECB pursues policies that have driven the euro higher against other currencies, hurting French exports on global markets.
The ECB chief's remarks came shortly after the euro spiked to a new record Wednesday of 1.3787 dollars.
Sarkozy's charges against the ECB have fuelled concerns, especially in Germany, about the central bank's independence, which it guards jealously.
In an impassioned address to EU lawmakers, Trichet stressed: "All governments in Europe have said that they would respect the independence of the central bank.
"Independence is in the treaty, independence is the absolute key for our credibility," he said, adding that long-term interest rates in the eurozone bond market were low because of the ECB's credibility.
Speaking to members of the European Parliament, Trichet said: "We are in a floating exchange system and we have a way to discuss those matters, which is the G7."
Currently, G7 members discuss exchange rates in regular meetings, but French President Nicolas Sarkozy has called for a more pro-active approach to currency rates from Europe, judging that the euro is unfairly overvalued.
"It is not to say that the situation is easy, it not to say that the situation is very nice, but I would say ... let's be as responsable as possible in the current circumstances and let's be sure that we have this dialogue between us and our partners," Trichet said.
Trichet has come under fire from France's rightwing leader, who has said the ECB pursues policies that have driven the euro higher against other currencies, hurting French exports on global markets.
The ECB chief's remarks came shortly after the euro spiked to a new record Wednesday of 1.3787 dollars.
Sarkozy's charges against the ECB have fuelled concerns, especially in Germany, about the central bank's independence, which it guards jealously.
In an impassioned address to EU lawmakers, Trichet stressed: "All governments in Europe have said that they would respect the independence of the central bank.
"Independence is in the treaty, independence is the absolute key for our credibility," he said, adding that long-term interest rates in the eurozone bond market were low because of the ECB's credibility.