ECB's Trichet Criticizes Disorderly FX Moves
European Central Bank President Jean-Claude Trichet said disorderly swings in currencies were undesirable, according to an interview with a French magazine published on Thursday.
"In the present circumstances, I am concerned by excessive exchange rate movements," he told Le Point weekly, which did not say when the interview had been conducted.
In a repetition of recent comments, he added: "I noted with extreme attention the reaffirmation by the U.S. authorities, in particular the president and the treasury secretary, that a strong dollar was in the interests of the U.S. economy."
Trichet rejected criticisms that the ECB and the U.S. Federal Reserve had created the conditions which eventually led to the subprime crisis in the United States which provoked generated financial market turmoil around the world.
"You have to choose between the criticisms. Either we are reproached for being too orthodox and having interest rates that are too high. Or we are reproached for being too kindly to the financial markets and having rates that are too low," he said. "Both criticisms are unjustified."
He stressed the importance of ensuring medium-term price stability at a time when the price of oil and other commodities was rising.
"If we were no longer credible in ensuring price stability, households would lose confidence, and the financial markets themselves would be more turbulent, because they would be troubled by uncertainty over inflation in the medium term," he said.
Trichet said the ECB and other central banks had flagged well before the crisis that financial market risks were being underestimated and that corrections were necessary.
"You will have seen that the ECB was particularly active and energetic to allow the best possible functioning of the market and therefore ensure that the necessary corrections on the financial markets could be as orderly as possible," he said.