German Chancellor Angela Merkel dismissed attempts to manipulate exchange rates, saying the present value of the euro against the dollar is within the currency’s normal range.
Merkel, speaking in Berlin today, acknowledged concerns over the euro’s strength in southern European countries that have been “at pains to lower their labor unit costs in a fixed exchange rate regime” only to see the gains “melt away like the snow in the sun under certain conditions.”
“On the other hand, we have to say that euro exchange rates between $1.30 and $1.40 are part of the normality of the history of the euro,” she told an event marking 50 years of the German government’s council of economic advisers. The euro bought $1.3375 as of 3:55 p.m. in Berlin.
Merkel’s comments follow concerns she expressed on Jan. 24 over Japanese moves toward monetary easing. Officials from the Group of 20 nations meeting in Moscow last week pledged not “to target our exchange rates for competitive purposes,” without singling out Japan for allowing the yen to decline.
The chancellor wasn’t attempting to set an upper limit to the euro’s exchange rate, Steffen Seibert, her chief spokesman, said by text message. What she meant is that “the euro’s current exchange rate is nothing out of the ordinary,” he said.
Merkel said that the G-20 finance ministers had sent an “important signal” at their Moscow meeting, and that the full G-20 summit in September will assess progress in adhering to the statement.
“We want exchange rates to be set freely, but also advocate that all respect that,” Merkel said. “We have time until September when there is the meeting of the heads of government and state to see whether everyone has held his promise.”
The 17-nation euro has appreciated almost 11 percent since July 24, when developments in the debt crisis centered on Greece drove the single currency down to a two-year low against the dollar and the lowest against the yen in more than 11 years.
The euro’s fluctuations have an impact in particular on exporting nations such as Germany, where about one in every three jobs relies on foreign sales, according to the BGA association of exporters. German exports rose 3.4 percent in 2012 to a record 1.1 trillion euros ($1.5 trillion), the Federal Statistics Office in Wiesbaden said Feb. 8.
While the euro has “often” been in the range of $1.30 to $1.40 or stronger in recent years, “the German economy could more or less deal with this,” Dirk Schlotboeller, an economist at the DIHK trade and industry chambers in Berlin, said by telephone today. German exports “are less price-sensitive than those of a lot of other European competitors,” he said.
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