Mario Draghi says the currency war is phoney. According to the European Central Bank president, there’s been too much “chatter” in the past two weeks about fluctuations in global currencies, set off by a decision by Japan’s central bank to tackle domestic deflation that’s weakened the yen.
Talk of a round of competitive devaluations, or calls for central banks to intervene to steer their currencies “is either inappropriate, or fruitless, and in all cases it’s self defeating,” Draghi said at a press conference in Moscow, where the Group of 20 nations are meeting.
Problem is, Draghi isn’t exactly a non-combatant in the monetary skirmish. Last week, he managed to talk the euro down almost two cents as he spoke in Frankfurt, when he suggested interest-rate cuts remain a possibility if the euro’s level affects inflation.
Draghi has also played currency ping-pong with Jens Weidmann, head of Germany’s Bundesbank. What Draghi has sent down, Weidmann has sent back up, as the German has argued twice within a week that there’s nothing much wrong with the level the euro is at. Maybe that’s why Draghi is now urging a vow of silence.