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European Bank Says Exchange Rate 'Volatility' is 'Source of Uncertainty'

European Central Bank chief Mario Draghi voiced concern Thursday over the surging euro, which is complicating the 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 at a press conference.

The euro has roared to a more than three-year high against the dollar to reach $1.24 on the back of a stronger eurozone economy, and after U.S. Treasury Secretary Steven Mnuchin talked down the greenback on Wednesday. 

Draghi's comments echoed those he made in September and which helped weaken the currency at the time.

The euro's recent jump poses a headache to policymakers, who are looking to end stimulus efforts now that the economy is picking up speed but are still faced with stubbornly low inflation.

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 19-nation single currency area.

Earlier on Thursday, ECB policymakers kept key interest on hold and their mass bond-buying program unchanged, leaving their massive support for the eurozone economy in place.

ECB policymakers have repeatedly insisted that they do not target the exchange rate, with the institution's mandate extending only to the rate of inflation.

Source: Agence France Presse


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