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Stronger euro could hurt recovery: ECB's Draghi

FRANKFURT-AM_MAIN, Germany--European Central Bank head Mario Draghi said Monday that a stronger euro would put at risk the shaky recovery in the 18 countries that use the shared currency.

Draghi made the remark to legislators in the European Parliament in Strasbourg amid worries that the modest rebound in Europe is stalling. Data showed industrial production fell by 1.1 percent in May in the currency zone.

A stronger euro would hurt export-dependent businesses. However Draghi offered no new steps to boost the economy beyond the raft of measures the bank announced on May 8. Markets shrugged off the remark and the euro traded little changed at around US$1.36.

At that level, it is down from its 2014 peak of just below US$1.40, its highest in 2 1/2 years.

Draghi said that while the bank does not target any particular exchange rate it would monitor the effect of any appreciation of the euro because that would affect the inflation rate, the bank's chief policy target. He said that the exchange rate “remains an important driver of future inflation in the euro area,” adding that in the present context, an appreciated exchange rate is a risk to the sustainability of the recovery.”

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President of the European Central Bank Mario Draghi on his way to a news conference in Frankfurt, Germany, following a meeting of the ECB governing council, Thursday, July 3. The ECB decided to leave its main interest rate unchanged.

(AP

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