Mario Draghi is facing yet another headache this year as a strong currency threatens to derail his quest to keep prices stable, with many analysts suggesting there's no easy way out for the president of the European Central Bank (ECB).
Investors have been flocking to the single currency as the euro zone economy keeps growing and political risks dissipate. However, that could become a problem for the European Central Bank as a stronger currency can mean that European-produced products become pricier and less attractive outside the region. The euro has risen nearly 3 percent against the U.S. dollar since the start of the year, at a time when the ECB has been assessing how to reduce its monetary stimulus — which aims to increase lending and stoke consumer prices.
At the bank's last press conference in January, Draghi admitted that recent volatility in the exchange rate was a "source of uncertainty." The ECB's primary target has always been inflation and not the exchange rate and Draghi — like many central bankers around the world — has been cautious when speaking of his own currency.