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ECB under pressure on 'crazy’ euro: Airbus Exec

Fabrice Bregier, Chief Executive Officer of Airbus.
Balint Porneczi | Bloomberg | Getty Images
Fabrice Bregier, Chief Executive Officer of Airbus.

Pressure is mounting on the European Central Bank (ECB) to take action against a persistently strong euro with a leading industrialist calling on Frankfurt to tackle the "crazy" strength of the currency.

Fabrice Brégier, chief executive of Airbus's passenger jet business, said the ECB should intervene to push the value of the euro against the dollar down by 10 per cent from an "excessive" $1.35 to between $1.20 and $1.25.

"[Europe] cannot be the only economic zone of the world that doesn't consider its currency as a weapon . . . as a key asset to promote its economy," he told the Financial Times in an interview.

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Mr Brégier's comments coincide with calls from the International Monetary Fund and politicians in some eurozone countries – France in particular – for the bank to consider a program of quantitative easing to tackle low inflation, sluggish economic growth and the strong euro.

Benoît Coeuré, a member of the ECB's executive board, acknowledged in an interview that the stronger the euro became, the more the bank would come under pressure to act. "A lot of the low level of inflation . . . is due to the strength of the euro so the stronger the euro the more we have to do monetary accommodation."

However, he rejected calls to focus on the exchange rate explicitly. "It is not possible to target it because exchange rates are set on global markets, so it wouldn't be wise or possible for us to have it as a policy target."

He also insisted there was no pressing need for the ECB to embark on a round of QE. "I see the odds as being low," he said. "I am very convinced that what we decided already will work and will prop up inflation."

In June, the ECB set out several exceptional measures, including cutting a key interest rate below zero, to tackle the threat of deflation.

Despite the strength of these measures, the euro has barely weakened, and was worth $1.36 on Monday. Some economists believe the euro is unlikely to depreciate against the dollar considerably unless the ECB engages in quantitative easing.

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Mr Coeuré expressed doubts about the effectiveness of QE, which has been used by the US Federal Reserve and the Bank of England. "Something that has worked in the US or in the UK may not work in the eurozone because we are financed by banks, not by financial markets. The level of government bond yields is very low. Why would we need QE?"

Any explicit attempt to weaken the euro is likely to be opposed in Germany. "We need a stable currency and we have one. The euro at $1.35 gives us a stable framework for competitiveness," said one senior German official. "We do not need to talk the euro up or down. Currency manipulation is not a route to competitiveness, it is a soft alternative to hard explanations to the electorate."

Airbus, which sells its aircraft in dollars but incurs costs in euros, is one of the most exposed groups in Europe to a strong single currency. Other groups such as Unilever, SAP and BMW have also faced currency headwinds.

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Mr Brégier stressed he was not specifying what additional measures the ECB should take, but said: "Let's look at what the Japanese are doing. They have devalued the Yen by 20 per cent. Here, we just have to go back to more normal exchange rates ... We just have to give long-term visibility to the markets that this is now a key political willingness of the European nations."

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