The President of the European Central Bank Mario Draghi indirectly criticised the US Treasury Secretary’s statements supporting a weak dollar, saying they “violated an agreement that has been in place for decades.”
Without ever mentioning his name, but clearly referring to the US Treasury Secretary Steven Mnuchin, Draghi accused the US of “targeting” exchange rates with statements intended to lower the value of the dollar in order to boost exports.
The dollar hit a three-year low against the euro on Thursday morning following comments from Mnuchin the night before praising the weakness of the American currency “Obviously a weaker dollar is good for us [the US] as it relates to trade and opportunities,” the Treasury Secretary said.
Draghi referred to a statement issued by the IMF in October when he was asked if he thought that Mnuchin’s comments were “helpful.”
“We recognise that excessive volatility or disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will refrain from competitive devaluations, and will not target our exchange rates for competitive purposes,” the statement said.
“I think that is my answer,” Draghi told reporters after reading the text.
Asked if the ECB was concerned about the volatility that Mnuchin’s comments had caused in the currency markets, he said “yes, there was some concern. Several members of the Governing Council have expressed concern.”
“And this concern went beyond interest rates and concerned the general state of international relations at the moment,” he added.
At the same press conference the ECB announced its decision to keep interest rates unchanged and keep its 30 billion euro a month Quantitative Easing programme in place until at least September.