LONDON (Reuters) - Contrary to what his manifesto suggests, French far-left presidential candidate Jean-Luc Melenchon now reckons the euro is trading at an “acceptable” level and does not need to be devalued, his economic spokesman says.
In a line that had puzzled some analysts and currency traders, Melenchon promised in his manifesto to “devalue the euro to its initial exchange rate against the dollar” if elected. It would be part of a renegotiation of the terms of France’s membership of the European Union.
The reason for the puzzlement is that the euro's initial exchange rate when it began trading in 1999 was around $1.17 EUR=. It is now trading at around $1.07.
A return to its original level, therefore, would represent an appreciation of almost 10 percent to a level it has not traded at since 2015.
Melenchon’s economic spokesman Liem Hoang Ngoc told Reuters the line in question was an old view that had simply not been updated for his election manifesto.
“The euro has effectively returned to an acceptable level against the dollar,” he wrote in an email to Reuters on Thursday when asked about the discrepancy. “This sentence was timely when the euro was overvalued.”
A December 2010 article in the French newspaper Liberation quoted Melenchon — then a member of the European Parliament for the Left Front — saying the euro should be devalued to its starting level against the dollar.
At that time, however, the euro was trading at above $1.30. The spike in inflation that would create, Melenchon was quoted as saying, would be a “very good thing” that would hurt business owners, not workers.
Melenchon has been a rank outsider in the French race until recently. Some polls now put him in third place, ahead of the conservative candidate Francois Fillon.
Reporting by Jemima Kelly; Additional reporting by Helen Reid Editing by Jeremy Gaunt. Editing by Jeremy Gaunt