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Trump administration should stop making currency comments: ECB's Villeroy
Policymakers must respect international laws and avoid making targeted currency exchange rate comments, the governor of the Bank of France said in an interview Tuesday.
Francois Villeroy de Galhau, who is also a member of the European Central Bank's governing council, made the comments when asked to respond to the new U.S. administration's criticism on January 31 that Germany was using a "grossly undervalued" euro in order to gain an advantage over the U.S. and its own European Union trade partners.
"Before criticizing Europe, any wise person should first of all respect international rules," Villeroy told Italian publication Sole 24 Ore in an interview published Tuesday.
He also stressed U.S. President Donald Trump's administration must respect the international code of conduct agreed upon by the Group of Seven (G7), the informal bloc which has advised against making unilateral remarks on currency exchange rates.
Peter Navarro, the head of Trump's National Trade Council, told the Financial Times last week the euro was like an "implicit Deutsche Mark" and argued its low valuation gave Germany a competitive advantage over its trading partners.
Euro nears biggest fall of 2017
The euro was on track for its biggest fall since the New Year on Tuesday as political uncertainty appeared to weigh down the single currency. The euro fell 0.73 percent against the dollar to $1.0671 in lunchtime trade.
Marine Le Pen, leader of the anti-immigration and populist National Front party, unveiled her manifesto on Sunday in which she called for France to leave the euro. Le Pen continues to be the political frontrunner with 25 percent of the vote, according to polling firm Ifop. However, opinion polls suggest she is likely to lose to either the independent candidate, Emmanuel Macron or center-right candidate Francois Fillon in the final round of voting in May.
"The idea of leaving the euro and devaluing our currency to run up bigger deficits overlooks the fact that financing French debt would cost significantly more," Villeory warned in a column for Le Figaro published Monday.
The Bank of France Governor estimated that borrowing costs could exceed 30 billion euros ($32 billion) should a Le Pen presidency result in France leaving the single currency.
