French President Francois Hollande signals currency tensions

MUMBAI: French President Francois Hollande chose India’s financial capital to express displeasure about the growing exchange rate interventions by policymakers to revive economies even as Europe stepped out of the sovereign crisis. “The fear of Eurozone breaking up is over, and confidence is back,’’ Hollande told businessmen of India and France at a CII and Ficci conference to promote business.

Hollande’s concern over the European Union’s currency comes amid rising tension between the developed nations themselves and emerging exporting countries. Japan’s Yen has depreciated 20% in about three months, though artificially, as Prime Minister Shinzo Abe attempts to revive an economy that’s been moribund for two decades.

Various statements by policy makers ahead of the G-20 summit in Moscow has come in for criticism though many admit that a possible currency war may be brewing. The head of the European Central Bank Mario Draghi criticised wrangling over exchange rates ahead of the meeting.

US Treasury official Lael Brainard warned against “loose talk”. Although Europe has escaped the sovereign crisis after more than two years of wrangling over bailouts for Greece, Spain and Portugal, the economy would need growth from emerging economies such as India to pull it out of recession. “The challenge is recession in our part of the world,’’ Hollande said.