The U.S. dollar might have skidded to a three-year low but its depreciation is not worrying for Europe just yet, a top-ranking EU official told CNBC at the World Economic Forum in Davos, Switzerland.
The euro was 0.2 percent higher against the dollar Thursday morning, trading at $1.2432. This after the dollar saw its biggest one-day drop in 10 months Wednesday — after Treasury Secretary Steven Mnuchin said a weaker greenback is good for the U.S.
A weaker dollar could jeopardize European exports as U.S. consumers would likely shun more expensive goods from overseas, in favor of domestic products.
“For the time being we see nothing which is absolutely out of control,” Pierre Moscovici, the European commissioner for economic and financial affairs, told CNBC Thursday in Davos.
“But we need to be of course vigilant, watching it, and because we need to strike the right balance especially between the dollar and the euro,” the former finance minister of France added.
President Donald Trump said before taking office that the dollar was “too strong” and American firms were therefore at a disadvantage when competing with others globally. On Wednesday afternoon, White House spokeswoman Sarah Sanders sought to clarify Mnuchin’s earlier comments, telling reporters that Trump believes in a free-floating currency.
In the last two years the euro has risen by around 14 percent against the dollar. Moscovici told CNBC that officials need to monitor the exchange rate in the medium-term, adding that “we need to address that with cool blood and (a) cool head.”
