Draghi makes pledge on euro strength: top managers react
ECB president will monitor appreciation of the single currency, but refuses to be drawn on Irish bank debt deal.
by Emily Blewett on Feb 07, 2013 at 16:52
The European Central Bank president Mario Draghi pledged on Thursday to monitor euro strength.
In the monthly press conference, Draghi announced that a decision to hold rates had been unanimous. On the appreciation of the euro, which is increasingly being seen as an obstacle to the region's growth, Draghi said:
'The exchange rate is not a policy target, but it is important for growth and price stability. We certainly want to see whether the appreciation is sustained and will alter our risk assessment as far as price stability is concerned.'
The euro fell following the comments.
Moments before the news of Ireland's bank debt deal broke, Draghi declined to comment on the ECB's role in the restructuring and responded the ECB had 'taken note'. The deal will mean ECB will support the Irish government in bailing out its banks.
Draghi also declined to comment on the derivatives scandal at Italian bank Siena's Monte dei Paschi, refusing to be drawn on his knowledge of the matter while serving as Italy's central bank chief.
Citywire Global spoke to leading fund managers after the monthly press conference in Frankfurt.
'Draghi was a lot more active verbally that we expected in that he explicitly referred to double-sided price stability and hinted that he will react to currency moves.'
'I think that he fulfilled his potential objectives in stabilising the currency. The reaction in the markets was that risk mode was up. Both German and Italian yields went lower which is not something you see every day.'
'I would say that this increased our confidence and you can already see the front end has stabilised. The ECB is telling the market that it is on the ball and that if there are currency moves here, that it will monitor it.'
Andrew Mulliner, co-manager on the Henderson Total Return Bond Fund, with A-rated Phil Apel:
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