Euro-area exports declined the most in five months in December as the currency’s gains made European goods less competitive abroad, making it harder for the 17- nation economy to recover from the worst recession since 2009.
Exports dropped a seasonally adjusted 1.8 percent from November, when they rose a revised 0.6 percent, the European Union’s statistics office in Luxembourg said today. That is the sharpest decline since July. Imports fell 3 percent and the trade surplus increased to 12 billion euros ($16 billion) from 10.5 billion euros in the previous month.
Exchange rates are at the top of the agenda for Group of 20 finance chiefs gathering today in Moscow amid growing speculation about a currency war. French President Francois Hollande last week urged coordinated government action on the euro’s rate, arguing that the currency’s 14-month peak against the U.S. dollar makes it more difficult for Europe’s recession- hit economy to recover.
The euro has declined 0.5 percent since European Central Bank President Mario Draghi said on Feb. 7 that the currency’s gains pose a risk for growth and inflation. The euro traded at $1.3322 against the dollar at 10:27 a.m. in Brussels, up 8.5 percent in the past six months.
“If the appreciation of the exchange rate reflects a regained confidence in the euro area and an improved growth outlook, then this is fully in line with fundamentals,” ECB council member Jens Weidmann said in a Feb. 13 interview. “You cannot really say that the euro is seriously overvalued.”
The ECB forecasts the euro-area economy will shrink 0.3 percent this year. The recession deepened in the fourth quarter as the economy contracted 0.6 percent, the worst performance in almost four years, data showed yesterday.
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