Bloomberg News

Draghi Urged Verbal Discipline on Currencies at G-20 Meeting

February 18, 2013

European Central Bank President Mario Draghi said he urged finance chiefs from the Group of 20 nations to be prudent when talking about currency movements.

During a G-20 meeting in Moscow last week, “I urged all parties to very, very strong verbal discipline” because “the less we talk about it, the better it is,” Draghi told European lawmakers in Brussels today. “Exchange rates should reflect fundamentals” and “looking at the real and nominal exchange rates of the euro, it is by and large around its long-term averages,” he added.

The G-20 sharpened their stance against governments trying to influence exchange rates as they sought to tame speculation of a global currency war without singling out Japan for criticism. The yen is near its lowest level against the dollar and the euro since 2010 after the Bank of Japan signaled further monetary easing to fight deflation.

The euro has gained more than 10 percent on a trade- weighted basis since Draghi pledged on July 26 to do whatever it takes to safeguard the single currency.

“The exchange rate is not a policy target but it’s important for growth and price stability,” Draghi said today.

The euro fell after the comments before recovering to trade at $1.3350 at 5 p.m. in Frankfurt, down 0.1 percent today.

The ECB will assess in its new economic projections next month whether the recent appreciation of the euro has changed the inflation outlook, Draghi said. The ECB currently predicts inflation will average 1.6 percent this year and 1.4 percent in 2014.

Draghi also said the latest euro-area data point to “economic weakness in the early part of 2013,” and that this is expected to be followed by “a very gradual recovery later in the year.”

The “number one policy problem now” is to ensure that the ECB’s record-low interest rates reach companies and households, Draghi said. “We’ll continue thinking about ways and means to enhance the transmission into the real economy,” he said.

To contact the reporter on this story: Jana Randow in Frankfurt at

To contact the editor responsible for this story: Craig Stirling at

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