* Currency "chatter" pointless -ECB chief Draghi
* Bundesbank's Weidmann says strong euro alone no grounds
* Weidmann says euro not seriously overvalued
* Expresses fear of politicization of exchange rates
FRANKFURT, Feb 15 The head of the European
Central Bank and its two German policymakers pushed back against
political pressure to target the euro's exchange rate ahead of
meeting of Group of 20 financial leaders on Friday.
Speaking ahead of the meeting in Moscow, ECB President Mario
Draghi said recent loose talk on currencies was "inappropriate,
fruitless and self-defeating".
Bundesbank chief Jens Weidmann, a strong voice on the ECB's
23-man Governing Council with whom Draghi in the past has been
at odds, earlier weighed in to say the euro was not seriously
overvalued and that the ECB would not change monetary policy
based on its impact on inflation alone.
"All this chatter that has been undertaken in the past few
weeks is either inappropriate or fruitless - in all cases it's
self defeating," Draghi said in opening remarks at a news
conference after meeting with Russian central bank officials.
The Italian head of the bank had said last Thursday that the
ECB would monitor the economic impact of the strengthening euro,
feeding expectations the climbing currency could open the door
to an interest rate cut. [ID: nL5N0B7GCD]
Both Weidmann and Joerg Asmussen, the German member of
six-member Executive Board that forms the nucleus of the
Governing Council, said the ECB would not target the euro's
"I don't think that Mario Draghi was trying to talk the euro
up or down," Weidmann said, adding that the ECB "will abstain
from manipulating or directly targeting the exchange rate."
French President Francois Hollande last week raised the
possibility of political interference in exchange rate policy
when he called for a medium-term target for the euro's value, a
move to counter its recent appreciation.
"I fear a politicization of the exchange rate," Weidmann
told news agency Bloomberg in an interview.
"I saw indications of that in Japan but you could as well
refer to recent statements by European politicians not too far
from here," he added in a thinly veiled rebuff of Hollande's
call for a currency target.
The G20 forum, which put together a huge financial backstop
to halt a market meltdown in 2009, is back in the spotlight
after a week in which the Group of Seven rich nations tried, and
spectacularly failed, to speak on currencies with one voice.
The G7 issued a joint statement on Tuesday reaffirming "our
longstanding commitment to market determined exchange rates".
Yet the show of unity was quickly undermined by off-the-record
briefings critical of Japan.
"In the last couple of days the Group of Seven biggest
industrial nations made clear once again that currency exchange
rates should be market-based and that we have no exchange rate
targets and that's true for us at the ECB too," Asmussen told
Germany's Deutschlandfunk radio.
The euro hit a 15-month peak of $1.3711 on Feb. 1,
before easing slightly.
The euro's strength "is one factor among many in determining
future inflation rates", Weidmann, who heads Germany's
Bundesbank said in the Bloomberg interview conducted on Feb. 13.
He added: "We will certainly not justify any monetary policy
decision with one single factor".