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ECB chief Draghi says talk of currency war 'exaggerated'

Market forces should determine exchange rates

ECB chief Draghi says talk of currency war 'exaggerated'

Rome, February 12 - European Central Bank President Mario Draghi on Tuesday said that talks of a currency war taking place were "exaggerated". During a press conference after a speech to the Spanish parliament in Madrid, Draghi said: "we don't see anything like this". However, Draghi also hinted at recent pressures on the bank to take some sort of exchange rate action, saying that comments by some authorities relating to the ECB's exchange rate policies were "inappropriate" and "fruitless". "Inappropriate" remarks are those which seem to be aimed at encouraging Europe's central bank to "move on exchange rates, in violation of the independence guaranteed by the (the bank's) mandate," the central bank chief said. Finance leaders and central bankers in some of the world's leading economies in recent days have been commenting on concerns about the possibility that some countries may consider devaluations as a way to boost flagging economic growth. Earlier Tuesday, a statement from the Group of Seven advanced industrial economies (G-7) said its members reaffirmed their commitment to letting market forces determine exchange rates. The G7 - which includes the US, Japan, Germany, France, the UK, Italy and Canada - acted following recent comments by the prime minister of Japan who suggested that the country would try to manage its exchange rate. This generated a sharp drop in the yen and sparked warnings from other economies, including in Europe, that such policies risked starting a currency war. Speaking to the Spanish parliament, the ECB chief said: "Countries immersed in painful reforms should not feel abandoned to their fate". The objective of the reforms is "a more prosperous future for Europe," Draghi said.

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