(Bloomberg) -- European Central Bank Governing Council member Ewald Nowotny said he was taken aback by the U.S. appearing to favor a weaker dollar -- something that the world's major economies have explicitly vowed not to do.
Nowotny, who is the head of Austria's central bank, said in an interview with Wiener Zeitung on Wednesday:
“What surprises us very much are two things. On the one hand, that the U.S. Treasury purposely pushes down the dollar and wants to keep it low, and on the other hand, that there has been no one in the vicinity of Donald Trump, where there are a number of sensible people, who has had a positive influence on the president and his politics.”
Nowotny's words are most explicit rebuke so far of U.S. currency talk that has created alarm among European policy makers.
Speaking at the World Economic Forum in Davos, Switzerland last month, U.S. Treasury Secretary Steven Mnuchin sparked a bout of currency volatility with a comment that seemed to express support for a weak dollar, only for President Donald Trump to praise a strong greenback a few days later.
Mnuchin's comment drew a pointed rebuke from ECB President Mario Draghi, who recalled the commitment by Group of 20 countries to refrain from attempts to talk down their currencies to get competitive advantage. Draghi said on Jan. 25:
“Certain movements in the exchange rates to the extent that are justified by the strengthening of the economy are part of nature. It's a fact of nature, so the issue is whether these other movements in the exchange rate which may be caused by the use of language that I said is not part of the terms of reference that been agreed recently, whether that has an effect on our inflation path.”
An ECB spokesman declined to comment on Nowotny's words.
To contact the reporter on this story: Alessandro Speciale in Frankfurt at aspeciale@bloomberg.net.
To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Brian Swint, Zoe Schneeweiss
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