ECB President warns on 'brutal' currency moves
European Central Bank president Jean-Claude Trichet said today he did not welcome 'brutal' exchange rate movements, a few hours after the euro hit another record high against the dollar.
Trichet had introduced the word 'brutal' in 2004 when there was a question of whether the ECB would intervene to stem an initial sudden rise by the euro against the US currency.
In Asian trade this morning, the euro struck a new peak of $1.4967.
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The ECB chief said that 'abrupt and sharp' movements by foreign currencies did not favour global growth, reiterating comments made early this month when the bank left its main interest rate steady at 4%.
Trichet said he 'enormously appreciated' remarks by US Treasury Secretary Henry Paulson that a strong dollar was in the US economic interest. Many market observers believe that US officials are in fact content to let the dollar slide against other major currencies because it favours US exports.
Euro zone exports suffer from the euro's sharp rise in value against the dollar, yen and Chinese yuan.
Turning to persistent turmoil in international markets that followed the collapse of the US market for high-risk mortgages, he urged banks to bolster their risk managment procedures.
Several major US and European banks have posted massive losses after buying securities that were backed by US home loans made to borrowers who defaulted as the housing market went into a tail-spin.
Trichet said the Eurosystem of European central banks had proved during the financial turmoil that it could cope with 'stressed' market conditions.
I don't understand this point: If a U.S. company has its product made in China, say, but then calls it a U.S. product, will it be sold in Europe, say, and be able to gain market share? Say we're talking consumer electronics.
Does this make more money for the U.S. corporation but not the U.S. worker?
I have thought that over the last thirty years all the companies that make anything anyone wants to buy have moved their plants out of the U.S. How are American workers or communities going to benefit from a weak dollar if all this is true?