Published On: Mon, Feb 12th, 2018

EU goes HEAD-TO-HEAD with USA in growing currency war – 'We are CONCERNED!'

The ECB is concerned the US is attempting to exert “political influence” on exchange rates, with the issue set to explode into outright confrontation at an upcoming G20 meeting. 

The eurozone bank said it was “certainly concerned” by perceived attempts to influence the exchange rate in favour of the US dollar. 

ECB policymaker Ewald Nowotny said, for the second time in as many months, the US Treasury is deliberately putting downward pressure on the dollar. 

A weaker dollar tends to benefit large US multinational companies but can also make imports more expensive and hurt consumers. The dollar has fallen two percent this year and declined 10 percent in 2017.

Mr Nowotny said: “We in the ECB are certainly concerned about attempts by the United States to politically influence the exchange rate.

“That was a theme of economic discussions in Davos, where the ECB addressed this, and it will certainly be a theme at the upcoming G20 summit.”

And he hit out at US president Donald Trump, claiming low unemployment, robust growth and tame inflation are not successes he can claim credit for. 

The policymaker said: “You have to view the economy over a longer period.

“What the United States is currently experiencing is the inheritance from the previous government, as well as Fed policy.”

Both issues will be brought up by the ECB at the next G20 meeting, Mr Nowotny warned. 

Tensions have been simmering between the EU and US for some months now, worsened by the growing focus on the United States of Europe and America First movements.

Last month a European economist warned of a tax and trade war with the USA – although he disagreed with the claim the dollar was being purposefully devalued. 

Professor Gabriel Felbermayr said: “I do not believe in a currency war, a devaluation race. A politically provoked devaluation race is therefore hardly possible. 

“A trade war on the other hand is lurking behind every corner- and the tax war with America has already begun.”

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