There is an interesting book published in 2011, Currency wars by James Rickards, with a shocking subtitle: “The making of the next global crisis”. Lat week France president told in the European Parliament: “The Euro should not fluctuate according to the mood of the markets” If this is suppose to express a desire for an exchange rate intervention is yet to be seen but certainly there are two views inside the EU. The one expressed by François Hollande and the one supported by Germany that has long opposed any intervention on this issue affirming that eurozone´s top priority must be “strengthening competitiveness , rather than weakening the currency.
The relevant point delivered by Mr. Hollande is that “A monetary zone must have an exchange rate policy, if not it will be subjected to an exchange rate that does not reflect the real state of the economy”. The euro area is expected to deliver another weak growth this year: around 0%, but the Euro appreciated during the last 12 months against the USD (0, 76 a year ago vs. 0, 74 this month, and a 4% rise this year).
Currency market is by definition an Over the Counter one, hence not regulated. Should the ECB factor the strength of the Euro or should it take decisions as had been taken in Japan recently, weakening the exchange rate of the yen?
The world is yet to recover from the 2008 crisis and promote exports had been taken as a first priority politic for many countries worldwide.
In the globalized world we live today the main question for Europe is if this trade promotion policy can be taken without currency intervention.
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