Dáil Éireann Debate, Wednesday - 5 October 2022
107. Deputy Emer Higgins asked the Minister for Finance his views in relation to the trajectory of the Euro; the steps that are being taken at both national and European level to protect the value of the Euro; and if he will make a statement on the matter. [48781/22]
Amharc ar fhreagraBetween the start of the year and the end of September, the euro depreciated by 2.6 per cent in nominal effective terms, mainly driven by a weakening against the Chinese renminbi, emerging market currencies and particularly the US dollar. However, the euro is up 5.1 per cent against the pound at the end of September.
The 13.8 per cent depreciation in the euro relative to the dollar reflects a myriad of factors, including the proximity of and Europe’s greater exposure to the war in Ukraine. More broadly, during periods of turbulence and uncertainty, the safe haven effect leads to a general depreciation of currencies against the US dollar. The depreciation of the euro against the dollar also reflects the European and US economies being at different stages of recovery, with US monetary policy tightening happening earlier.
Of course, exchange rate developments impact the European economy and inflation. It is for this reason that my fellow Finance Ministers and I work alongside the European Commission and the European Central Bank (ECB) to regularly take stock of the emerging economic outlook, including exchange rate developments. This issue was last discussed at the Eurogroup on 3rd October, with the topic regularly occurring ahead of international meetings of the World Bank Group and the IMF. However, it is preferable not to comment in detail on exchange rate movements as they are market determined. In addition, the Deputy will be aware that monetary policy setting in the euro area is the exclusive responsibility of the ECB, with its mandate to maintain price stability. The ECB has communicated clearly that it is monitoring market movements but that the exchange rate is not something that is targeted.
In terms of government policy, we can act to enhance the resilience of our economies through continued structural reforms and competitiveness improvements and by boosting our productivity at national level. In addition, as set out in the Eurogroup Statement earlier this week, close coordination of economic policies is needed to address the challenges we face. In this regard, the reforms and investments under the Recovery and Resilience Facility will further improve the sustainability and resilience of our economies.
In short, there is a strong and continued focus at Eurogroup on pursuing the right economic policy mix and further deepening Economic and Monetary Union so as to enhance the international attractiveness of the euro as a global currency.
