France called yesterday (11 February) for coordinated action by the world's major economies to counter the strength of the euro and avoid damaging an economic recovery, but Europe's finance ministers said it was up to markets to decide the currency's value.
French President François Hollande has raised the possibility of political interference in exchange rate policy when he called for a medium-term target for the euro's value, a move to counter its recent appreciation.
France's Finance Minister Pierre Moscovici reiterated Hollande's message to his eurozone peers in Brussels and urged "strong action", but appeared to win little support. Euro zone ministers said the issue should be discussed by finance ministers and central bankers from the world's 20 biggest economies in Moscow on Friday and Saturday.
"We really have to take strong action at the international level for stability and then all instruments can be used but in a coordinated manner," Moscovici told a news conference.
Asked precisely what shape any intervention might take, he said: "This is not about, to be clear, calling for pressure on the European Central Bank … or pushing for a currency war."
The strengthening euro is a source of tension between France and Germany, the two countries at the heart of European integration, because Berlin refuses to countenance governments' involvement in managing exchange rates.
The euro has risen about 13% against the dollar since touching $1.21 in July last year, although it has come off recent highs since European Central Bank President Mario Draghi indulged in some gentle verbal intervention last Thursday.
Germany has already rejected Hollande's initiative, and German Finance Minister Wolfgang Schäuble said in Brussels "that exchange rates should not be manipulated, that too high flexibility is of course dangerous."
The newly appointed chairman of eurozone finance ministers, Dutch Finance Minister Jeroen Dijsselbloem, was also reluctant to discuss the euro's value, saying the G20 was the place to do it.