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ECB's Draghi says euro strength is a source of uncertainty

[FRANKFURT] The euro's recent rise on foreign exchange markets is a source of uncertainty for the euro zone's inflation outlook and European Central Bank policymakers, ECB President Mario Draghi said on Thursday.

The common currency has rallied 5 per cent against the dollar in recent weeks, complicating the ECB's path out of its massive stimulus programme by threatening to curb a tepid recovery in euro zone inflation.

"The recent volatility in the exchange rate represents a source of uncertainty which requires monitoring with regard to its possible implications for the medium-term outlook for price stability," Mr Draghi told a news conference following the ECB's regular policy meeting.

A stronger currency makes exports from the bloc dearer and imports cheaper, undoing some of the ECB's multi-trillion euro efforts to stimulate price growth in the euro zone.

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The rally in the euro against the dollar has been given fresh momentum this week by US Treasury Secretary Steven Mnuchin, who welcomed a weakening of the greenback.

Mr Draghi had said in a letter published on Wednesday that exchange rate shifts were a side effect, not the objective, of ECB policy.


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