BERLIN: The euro is not currently overvalued and exchange rates should not be used to try and boost competitiveness, the German government said yesterday, rejecting French calls for ways to cap the single currency’s recent rise.
“The German government is of the conviction that the euro, historically speaking, is currently not overvalued,” government spokesman Steffen Seibert said. “What we’re currently seeing is a rise in the value of the euro which is a counter-reaction to the massive depreciation in the wake of the eurozone crisis,” Seibert said.
Earlier in Paris, French Finance Minister Pierre Moscovici had said an overvalued euro hurts economic growth and the issue should be discussed among eurozone finance ministers and the group of 20 leading economies.
But Berlin sees no cause for alarm. The latest rise in the euro “shows that financial markets’ confidence in the euro is returning. That’s not a bad thing,” government spokesman Seibert continued.
Germany believes that a currency’s exchange rate should reflect its economic fundamentals “and flexible exchange rates are the best to way to achieve this,” he said.