Hollande says EU should fight in currency war

City A.M. Reporter
FRENCH President Francois Hollande yesterday urged the Eurozone to set a medium-term target for its currency’s exchange rate, effectively bringing the EU into the currency wars.

But Berlin quickly moved to slap down the suggestion that Europe would intervene in the currency market, saying the bloc should improve its competitiveness in other ways.

Speaking two days before an EU budget summit, Hollande said that European countries should agree on a “realistic” exchange rate for the euro.

“The Eurozone must, through its heads of state and government, decide on a medium-term exchange rate,” he told journalists at a press conference after the speech to the European Parliament.

Hollande’s call echoes growing fears in some European states and within his Socialist government that fresh gains in the euro could hurt exporters and snuff out the recovery France needs to restore its public finances.

But German economy minister Philipp Roesler countered: “The objective must be to improve competitiveness and not to weaken the currency.”

Growing confidence that the 17-nation Eurozone is past the worst of its debt crisis has helped strengthen the euro to around $1.35 (£1.17) in recent weeks, although recent political troubles in Spain and Italy have seen yields jump and stocks fall.

“This is not about externally setting a target for the European Central Bank, which is independent, but about engaging the essential reform of the international monetary system,” Hollande said.

The Socialist premier also told the parliament that the UK could not pick and choose favoured chunks of EU membership.