The recent rise of euro The dollar is a consequence of US President Donald Trump’s alien policy and an opportunity for Europe, the European Central Bank (ECB) president said, Christine Lagarde.
“It is striking to note that in a period of uncertainty, where we should normally have seen the dollar being honored significantly, the opposite happened: the euro was depleted against the dollar,” Ms Lagarde told La Tribune Dimanche. “It is contradictory, but it is justified by the uncertainty and loss of confidence in US policies between certain departments of financial markets.”
Repeating earlier comments, Lagarde said in an interview published on Saturday that “more than a threat, it is an opportunity” and that “leaders must speed up the European Union’s deepening process”.
“At a time when we see the rule of law, the judicial system and the commercial rules being challenged in the US, where uncertainty is permanent and renewed daily, Europe is rightly perceived as a stable economic and political space, with a healthy currency and independent central bank.”
Ms Lagarde emphasized digital euro and single capital market, saying that “there is a more powerful current than I have seen in my six years” in both areas. “We also need to achieve the harmonization of supervision, as we have managed to do in the banking sector.”
Investors have rushed to leave the dollar so far this year, with the dollar receding against any other major currency monitored by Bloomberg. This largely reflects the US policy concerns ranging from the duty tariff policies that could hit the country’s economy to the threats of the US Federal Bank.
Lagarde is not the only ECB’s policymaker responsible for saying that Europe and the euro are currently going through a moment. Its vice president, Luis de Ginto, has said that the euro could be an alternative to the dollar as a reserve currency if Europe increases its completion efforts.
Similarly, Executive Council member Isabelle Sneabel emphasized earlier on Saturday that “we now have a historic opportunity to further strengthen the international role of the euro”.
When asked about Trump’s attacks on the Fed, Lagarde warned not to question the autonomy of monetary policy.
“The independence of the Central Bank is fundamental to monetary and financial hygiene in a country or group of countries,” he said. “In any case that a central bank was under the thumb of a budgetary authority, that never had a good end.”
Concerning the situation of the European economy, Lagarde said that “it is not pessimistic at all.”
“Employment can withstand, purchasing power is improving and inflation is decreasing,” he said. “Consumption and investment should recover, even if the uncertainties created by the US government’s announcements are burdened with confidence and slow down this recovery.”