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Draghi worried about euro strength

January 25, 2018

Following a meeting of central bank governors, ECB chief Mario Draghi has voiced concerns about the current strength of the euro area's single currency. The development makes it harder to exit crisis-era measures.

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Euro coin on eurozone flag
Image: picture alliance/dpa/Bildagentur-online/HRI-McPhoto

European Central Bank President Mario Draghi voiced concerns Thursday over the surging euro. As he talked to reporters following a governors' policy meeting in Frankfurt, the single currency of the 19-member eurozone climbed to 1.25 euros against the greenback, hitting the highest level since September 2012.

Draghi warned the euro strength was complicating the central bank's efforts to exit crisis-era stimulus measures.

"The recent volatility in exchange rates represents a source of uncertainty which requires monitoring with regard to its possible implications for the medium-term outlook for price stability," Draghi said in a statement.

Consumer prices in focus

A stronger euro makes imports cheaper, keeping the lid on consumer prices and putting the ECB's goal of an inflation rate just below 2.0 percent further out of reach.

It also hurts eurozone exporters whose goods become more expensive, potentially sapping growth in the euro area.

Earlier on Thursday, ECB policymakers decided to keep the benchmark interest rate on hold and leave the massive bond-buying program unchanged.

Draghi insisted that "an ample degree" of stimulus support was still needed despite an increasingly robust economic recovery in the 19-member bloc.

hg/jd (AP, AFP)