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8 Feb 2013
Forex Flash: Draghi tried to talk down the Euro – Nomura
Nomura economist Nick Matthews notes that on an eventful day of central bank action, he felt that ECB President was actively trying to talk down the Euro.
He feels that the quote of the day was “On the exchange rate. Well the first thing is that the appreciation is in a sense a sign of return of confidence in the euro. But net of the return of confidence, exchange rates should reflect fundamentals and by and large both the nominal and the real effective exchange rates are on their – or about their – long-run averages. However, as I said last time the exchange rate is not a policy target but it’s important for growth and price stability and we’ll certainly want to see whether the appreciation if sustained will alter our risk assessment as far as price stability is concerned. In any event, next month we will have the new projections. In the meantime, we will maintain our accommodative monetary policy stance and we will closely monitor money market developments.”
He feels that the quote of the day was “On the exchange rate. Well the first thing is that the appreciation is in a sense a sign of return of confidence in the euro. But net of the return of confidence, exchange rates should reflect fundamentals and by and large both the nominal and the real effective exchange rates are on their – or about their – long-run averages. However, as I said last time the exchange rate is not a policy target but it’s important for growth and price stability and we’ll certainly want to see whether the appreciation if sustained will alter our risk assessment as far as price stability is concerned. In any event, next month we will have the new projections. In the meantime, we will maintain our accommodative monetary policy stance and we will closely monitor money market developments.”