Currency News: Is a Weak Euro an Advantage for Germany?

Currency News

President Donald Trump suggested recently that the German luxury cars in his New York neighborhood reflect an unfair trade advantage. However, German Chancellor Angela Merkel said the Euro has a “valuation problem” that’s beyond her control.

Currency News

“If we still had the Deutsche Mark, it would be valued differently than the Euro is now,” she said as a response to a question about Germany’s current-account surplus at the Munich Security Conference on Saturday. “But that’s an independent monetary policy over, which I as chancellor have zero influence.”

“We’re proud that we have good products, just as the Americans are proud that they have good products,” Merkel said. “If you look around in this room at how many iPhones and Apples there are, then the vice president can be absolutely happy –- and Fifth Avenue is still not exactly overflowing with German cars.”

The U.S. comments triggered a trans-Atlantic spat as the administration picks fights over trade and currency manipulation. As the dollar strengthens against the Euro, so does US purchasing power for imports, or in this case German luxury vehicles.  ECB President Mario Draghi also rejected Navarro’s comments.  He explained that the Frankfurt-based central bank hadn’t intervened in foreign exchange markets since 2011. In addition, he attributed Germany’s surplus to productivity gains.

Just before meeting with Pence, Merkel said trade issues will take up much of the agenda between the two governments.

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