BERLIN (MNI) – ECB Governing Council member Ewald Nowotny said in a
newspaper interview published Monday that it is difficult at present to
assess the economic impact of the euro’s rise against the dollar and the
yuan.
The euro is currently carrying “the main burden from the
devaluation of the US dollar and the Chinese currency,” Nowotny told
Austrian business daily WirtschaftsBlatt.
The euro rise makes exports from the Eurozone more expensive on one
hand, but on the other hand it makes energy imports cheaper, the
Austrian central bank governor noted. It is not easy to balance of these
two contrary developments, he acknowledged.
Nowotny said it was “remarkable” how swiftly the currency movements
had taken place. Yet, he reminded that the ECB has no euro foreign
exchange rate goal and thus also no intention to intervene in currency
markets.
The euro rise has different economic impacts in the individual
Eurozone member states, the Governing Council member said. “For Greece I
do not see any immediate negative consequences,” he said. “For Ireland,
however, it will become more difficult because [the Irish economy]
depends more strongly on US investments,” he cautioned.
Commenting on fiscal policy, Nowotny urged Eurozone governments to
reduce public deficits without hurting the economy. Elevated budget
deficits due to the crisis “must not became a permanent situation,” he
stressed. “They have to be reduced to create leeway again, yet without
hurting the economy.”
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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