ECB'S Draghi Says Currency War Talk Exaggerated

Mario Draghi, President of the European Central Bank
Hannelore Foerster | Bloomberg | Getty Images
Mario Draghi, President of the European Central Bank

The euro briefly gained against the U.S. dollar and pared losses against the Japanese yen on Tuesday after European Central Bank chief Mario Draghi said exchange rates are as important for growth as for price stability.

He added that talk of a currency war was exaggerated.

"I think the term currency wars is way, way overdone. We are not witnessing anything like that," he said, speaking to reporters after addressing Spain's parliament. Spanish lawmakers invited Draghi to visit them after he spoke to Germany's Bundestag in October to defend his bond-buying plan.

The euro last traded at $1.3434, up 0.2 percent on the day, according to Reuters data.

The euro last traded at 125.38 yen, down 0.8 percent on the day.

Speaking to the Spanish lawmakers, Draghi said the ECB could only consider employing its OMT bond-purchase program if there are major problems in the transmission of its monetary policy.

The creation last September of the yet-to-be-used bond-purchase plan, dubbed the Outright Monetary Transactions (OMT) programme, has helped lower Spain's borrowing costs.

Spain has not yet asked for government aid - a condition for the ECB activating the OMT to buy its bonds.

"The ECB can only consider OMTs if there are major problems in the transmission of monetary policy and if there is strict and effective conditionality attached to an appropriate European Stability Mechanism (ESM) program," Draghi said in a text of his remarks, released on the ECB's website.

After addressing parliament, Draghi told reporters that Spain was on the right track towards economic recovery.