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Nowotny: Don't overdo euro's strength

Monday, February 18 14:19:09

The euro's exchange rate should not be dramatised with needless talk of currency wars, European Central Bank policymaker Ewald Nowotny said today, noting the currency was moving within standard ranges.

The euro hit a 15-month high against the dollar earlier this month, complicating the ECB's policy making tasks by weighing on growth and feeding expectations that it may have to take fresh policy action although some ECB members are against that.

"The dollar/euro exchange rate is moving in a range we have had before. We have had no special developments. There is a euro appreciation against the yen but not to a dramatic extent," he told reporters.

The yen dipped near a 33-month low against the dollar on Monday after Japan's prime minister signalled no change to the country's ultra-loose monetary policy, which its G20 peers earlier refrained from criticising.

"That means if it stays likes this we are having a sham discussion," he added, calling talk of a currency war - amid market perceptions that many central banks are trying to cheapen their currencies - "absolutely unnecessary".

He reiterated that the ECB, which targets price stability rather than exchange rates, had no need to intervene.

Nowotny, who is also head of the Austrian National Bank, said his central bank still assumed the euro zone economy would reach its low point in the first quarter of this year and then gradually recover.

But he added there were big discrepancies in growth rates among euro zone members and said the outlook could still be revised down. (C ) Reuters