* Merkel spokesman says strong euro not a concern
* Signals opposition to French plans for target rate
By Madeline Chambers
BERLIN, Feb 6 Germany said on Wednesday the
strong euro was not a concern and signalled opposition to a
French proposal for a mid-term target rate, exposing policy
divisions over mainland Europe's currency between its top two
The comments from Berlin, where most politicians are firmly
opposed to currency intervention, precede talks later in the day
between Chancellor Angela Merkel and French President Francois
Those talks, which will take place partly over a soccer
match, may set the tone for an EU summit on Thursday which aims
to secure a deal on the bloc's long-term budget and a G20 summit
in mid-February where global leaders are expected to discuss
The focus of that debate is likely to be Japan, where a new
monetary and fiscal policy drive has significantly weakened the
"If you look at the historic context, the German government
is of the view that the euro is not overvalued at the moment,"
Merkel's spokesman Steffen Seibert told a regular news
conference, in unusually strong comments on exchange rates.
The euro firmed to $1.3535 from around $1.3506 after the
remarks. Last week it peaked at $1.3711, its highest level since
Mindful of the impact of a strengthening currency on the
struggling French and euro zone economies, Paris has raised
worries about the euro in the last few days.
On Tuesday Hollande proposed that the euro zone should agree
on a "medium-term" exchange rate and act on global markets to
protect its interests.
Hollande's initiative reflects fears in some European
countries, and within his own Socialist government, that a
further rise in the euro could hit exporters and stifle the
recovery France needs to improve its public finances.
Finance Minister Pierre Moscovici said on Wednesday that
France would raise concerns about the euro's strength at talks
among euro zone finance ministers next Monday as well as at the
Moscovici said although there should be no pressure on the
European Central Bank - which holds a policy meeting on Thursday
- a discussion among European leaders about what might be a
"fair level" for the euro was legitimate.
Merkel's spokesman poured cold water on the idea.
"There will certainly be a conversation about that ... but
the view of the German government is that exchange rate policy
is not a suitable instrument to increase competitiveness,"
"You only achieve short-term impulses through targeted
devaluation. A long-term strengthening of competitiveness is not
achieved in that way."
Seibert added that the recent rise in the euro followed a
"massive" depreciation during the euro zone crisis and that it
was a sign that investor confidence was returning.
"Our basic conviction is that exchange rates should reflect
economic fundamental data," said Seibert, adding that the G8 and
G20 had agreed it was sensible for markets to determine exchange
It is unusual for Merkel's spokesman to be so outspoken
about the euro exchange rate. Germany is traditionally against
any attempt to intervene in currency markets and insists that
the ECB must remain independent of political influence.
At the G20 talks in Moscow on Feb. 15-16, the world's top
economic powers are likely to discuss currencies, especially the
In an effort to end years of stagnation and deflation, the
Bank of Japan announced last month that it would buy unlimited
assets next year and double its inflation target.
This move has accelerated a fall in the value of the yen and
triggered criticism from policymakers including Merkel and her
Finance Minister, Wolfgang Schaeuble.
However, officials have said G20 leaders will probably not
come out and call Japan's action a competitive devaluation.
One G20 official has said the yen fall could also be seen as
a result of its overvaluation in 2012, when investors sought
alternatives to the euro because of concern about the future of
the European common currency area.
Now that confidence in the euro was returning, money was
flowing back out of the yen and into Europe.
A Reuters poll published earlier on Wednesday showed that
leading foreign exchange forecasts do not expect the rejuvenated
common currency to keep rising.