Trichet Says Exchange Rate Volatility is Harmful
Excessive foreign exchange volatility is potentially damaging to the global economy, European Central Bank President Jean-Claude Trichet said on Thursday.
"We consider excessive volatility very counterproductive from the standpoint of global growth," Trichet told a news conference after the ECB left interest rates at 4%.
Preparations are underway for a meeting of euro zone finance ministers next Monday, which Trichet will also attend, where they hope to forge a united message of concern about the dollar's weakness ahead of a mid-October meeting of the Group of Seven industrial powers in Washington.
But a senior European source said on Wednesday that euro zone officials had little hope of enlisting U.S. support for action by G7 powers to rein in the surging euro.
Trichet said he "appreciated" what U.S. officials, including Treasury Secretary Henry Paulson, have said about a strong dollar being important to the U.S. economy.
On the yen, markets should start to take more account of better reflect Japanese economic fundamentals, he said, while more flexibility would be "appropriate" for the Chinese yuan and other emerging Asian currencies.
The euro has risen more than 7% versus the dollar and around 5% versus the yen this year, touching record after record in recent weeks.
Trichet said EU officials should hold to a common position.
"In Europe we have the methodology of governments and executive branches having only one position, otherwise it is (total) disorder," he said.