German exporters say they can cope with a strong Euro
2014-05-12 12:03:13
German exporters are well-positioned to cope with the strong Euro, Germany's leading trade organization said on Friday, even after data showed exports posted their biggest fall in nearly a year in March.
“The German economy is so strong that it can work with this level,” said Anton Boerner, president of the Federation of German Wholesale, Foreign Trade and Services (BGA).
The Euro has been steadily rising in recent months, hitting a 2 1/2-year high near 1.40 dollars on Thursday, before falling to around 1.38 after European Central Bank President Mario Draghi said the Euro's strength was a “serious concern”.
Boerner said Germany and other wealthy Euro zone countries could “live with” the current level but France and crisis-hit southern euro area countries would have a tougher time.
A stronger Euro makes exports outside the zone more expensive, undermining a budding recovery in the Euro zone's more fragile economies. France has called for the ECB to adjust its policy to weaken the euro, a move the German government has opposed.
However, Draghi indicated on Thursday the central bank might be willing to act, possibly with a new interest rate cut or liquidity injections, to weaken the Euro, amid concerns that it is hurting Euro zone exporters.
A number of German companies, including software maker SAP and auto parts manufacturer Robert Bosch, have blamed the strong Euro for damaging business. Bosch has indicated it would like to move more of its production overseas.
Still, Boerner, who argues German firms can remain competitive with a strong Euro, is staunchly against ECB intervening against the Euro strength.
“That would be only a flash in the pan and would accomplish nothing,” he said, adding that such a move would not be tolerated globally. “We would wind up in a currency war, which we would lose.”
The BGA head sees the Euro's appreciation as an overall sign of Europe's economic recovery, driven in part by the return of investors from developing economies.
“The Euro is showing itself as a stable currency. I see its strength as a positive, as a sign of trust,” said Boerner.