François Hollande set France on course for a clash with Germany after calling for the eurozone to manage its exchange rate, in the strongest warning yet by a senior European leader that the euro's strength could damage the recovery.
“The euro should not fluctuate according to the mood of the markets”, the French president said. “A monetary zone must have an exchange rate policy. If not it will be subjected to an exchange rate that does not reflect the real state of the economy.” He insisted he was not calling for the European Central Bank to set an exchange rate target, but he said reform of the international monetary system was “indispensable”.
Mr Hollande’s call drew a swift rebuke from Germany, which has long opposed active exchange rate intervention. A warning at the weekend from Pierre Moscovici, the French foreign finance minister, sent the euro lower, while concerns over political stability in Spain and Italy have also led the single currency to fall from its recent highs.
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