UPDATE 1-ECB's Draghi says appreciated euro a risk to recovery

Mon Jul 14, 2014 3:47pm EDT

* Says: "I am at the ECB and I'll stay at the ECB"

* Appreciated FX rate a risk to sustainability of recovery

* Moderate recovery expected to continue, risks to downside

* ECB Council ready to use unconventional measures if needed

By Tom K├Ârkemeier

STRASBOURG, France, July 14 (Reuters) - A stronger euro exchange rate is a risk to the sustainability of the euro zone recovery, European Central Bank President Mario Draghi said on Monday, while stressing that he has no plans to leave the bank.

Draghi reiterated his position that the exchange rate is not a policy target for the ECB, but said it was nonetheless an important driver of future inflation in the euro area.

"Certainly, the appreciation that took place since mid-2012 had an impact on price stability," Draghi told the European Parliament's Committee on Economic and Monetary Affairs in Strasbourg.

"In the present context, an appreciated exchange rate is a risk to the sustainability of the recovery," he added.

The ECB has faced pressure from the French government to bring down the euro's exchange rate, as a stronger euro risks hurting euro zone members' exports.

The head of planemaker Airbus, Fabrice Bregie, has also called on the ECB to take steps to devalue the common European currency to help exporters who are being hit by a strong euro.

The ECB cut interest rates to record lows last month as part of a package of measures to breathe life into a sluggish euro zone economy.

Draghi said the moderate recovery in the euro zone was expected to continue but that risks to the outlook were on the downside.

"The Governing Council is unanimous also in using also unconventional measures to address the risk of a too prolonged period of too low inflation," if needed, he said.

"QE falls squarely in our mandate," he added with reference to so-called quantitative easing, or money printing to buy assets.

Answering a question about reports he may leave his post and return to Italy, Draghi said he had no plans to leave the ECB.

"I am at the ECB and I'll stay at the ECB, and all the rumours to the contrary, coming from some interested parties perhaps, are unfounded," he said.

(Additional reporting by Paul Carrel and Maria Sheahan in Frankfurt, and by Martin Santa in Brussels; Editing by Susan Fenton and David Evans)

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