Monday, October 18, 2010 - 03:52
ECB Nowotny: Difficult To Assess Economic Impact Of Euro Rise
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."
ECB Nowotny: Difficult To Assess Economic Impact Of Euro Rise
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."