The euro is "too weak" due to the European Central Bank's monetary policy, German Chancellor Angela Merkel said on Monday, pointing out that this helped explain Germany's relatively high trade surplus.

Speaking to students at a secondary school in Berlin, Merkel said that the German trade surplus was propelled by two factors over which the government had no influence, namely the euro's exchange rate and the oil price.

The center-right chancellor said that the euro currently is "relatively weak." And then she added: "The euro is too weak ... due to the ECB's policy and with this, German goods are comparatively cheap."

Merkel told the students that another factor behind the German trade surplus was the relatively low oil price. If energy prices were higher, the trade balance of the German economy which relies on oil imports would look different, she said.

The German government has repeatedly pushed back against U.S. criticism of its trade surplus, saying nobody could blame Berlin for the competitiveness of 'Made in Germany' products.

"We can invest more at home," Merkel said, but added that vibrant domestic demand was already the main driver of overall economic growth in Germany.

Turning to France, Merkel said the German government must help new French President Emmanuel Macron to succeed, saying she hoped Macron manages to fight unemployment in France and adding that the best way to counter populists was to solve problems.

Earlier on Monday the finance ministers of Germany and France agreed their first meeting since Macron's election to strengthen the euro zone and to set up a joint working group that would present ideas by July on deepening integration within the currency union.

Meanwhile Macron is due to meet French unions on Tuesday to discuss labor reform. He has said he intends to use executive decrees as soon as this summer to reform labor laws in a country where unemployment remains high at 9.6%. (Reuters)

Source: www.businessworld.ie