Francois Hollande urges action on euro exchange rate, jobs policy

Tuesday 05 February 2013 21.53
Francois Hollande said European countries should agree on  exchange rate
Francois Hollande said European countries should agree on exchange rate

French President Francois Hollande has urged the euro zone to set a mid-term target for its currency's exchange rate and to forge a jobs policy to fight voter disillusionment.

But Mr Hollande's call, in a keynote speech to the European Parliament, ran into immediate opposition from Berlin which opposes intervening on currency markets.

Speaking two days before an EU summit where the bloc will seek to overcome a stalemate on its budget, Mr Hollande said that European countries should agree on a "realistic" medium-term exchange rate for the euro.

"The euro zone must, through its heads of state and government, decide on a medium-term exchange rate," he told journalists at a press conference after the speech.

Mr Hollande's call echoes growing fears in some European states that fresh gains in the euro could hurt exporters and snuff out the recovery France needs to restore its public finances.

"If there are trends like this, the Slovak government is ready to support any proposals which will help economic growth and Europe itself," Slovak Prime Minister Robert Fico reporters in Bratislava.

However, concerns about euro strength were unlikely to win over countries such as Germany which is strongly opposed to any form of currency intervention and keen to limit its financial contributions to Europe in an election year.

German Economy Minister Philipp Roesler, questioned about the euro in Paris shortly before Mr Hollande's comments, told journalists: "The objective must be to improve competitiveness and not to weaken the currency."

Growing confidence that the 17-nation euro zone is past the worst of its debt crisis has helped strengthen the euro to around $1.35 in recent weeks, although some analysts see those gains as easily reversed.

"This is not about externally setting a target for the European Central Bank, which is independent, but about engaging the essential reform of the international monetary system," Mr Hollande said.

The European Central Bank declined to comment on Hollande's remarks.

Mr Hollande's ministers, notably his leftist Industry Minister Arnaud Montebourg, have argued that a too strong euro risks harming efforts to boost France's manufacturing sector.

Keywords: francois hollande

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