What led to the big meves in EUR according to Benoit Coeure

The ECB’s APP does appear to have triggered substantial capital flows across borders. But it is far from clear whether this explains the depreciation in the effective exchange rate of the euro,” Executive Board member Benoit Coeure says in speech at Foreign Exchange Contact Group meeting in Frankfurt.

“The evidence does not suggest, however, that these capital flows have led to major exchange-rate movements. Rather, exchange rates have responded to forward-looking interest rate differentials”

“Asset purchase programs, together with negative interest rates, may have exacerbated those differentials through signaling and non-linear effects, but their effect on exchange rates is, by and large, not fundamentally different from conventional policy”

“The view that asset purchase programs in large advanced economies have encouraged harmful currency wars is misleading”

“Currency depreciation is a side-effect of policy and neither its main transmission channel, nor its objective”

Source: Bloomberg Pro Terminal

Junior Trader Stefan Panteleev

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