Surprisingly, Francois Hollande is turning into Europe's action man. Fresh from taking on Islamist terrorism in Mali, the French President is turning his attention to market terrorism, notably those currency speculators who are once again destabilising the euro zone with their gaming.
However, this time it's different. Bored with last year's sport of trashing the euro with bets that euro zone sovereign bonds were mouldy old cheese, currency traders are now buying up euros as if they were the last bottles of a rare vintage wine.
Still, the President is not pleased. Since July, the euro has appreciated by 11 per cent against the dollar making French cheese and wine that much more expensive to American consumers. "We can't let the euro fluctuate according to the mood of the market," President Hollande said yesterday. "We have to act at the international level to assert our interests."
It's almost a declaration of currency war and the French President is shaking his fist at Japan as well as the U.S.; both nations are chasing growth and exports with loose monetary policy. France desperately needs growth. Unemployment topped 3 million at the end of last year and the French car industry is in trouble: Peugeot-Citroen and Renault are planning mass layoffs, totalling 17 per cent of their workforce, as the two French industrial champions are laid low by the collapse in consumer demand.
But President Hollande's military swagger cuts no ice to the east, where Germany remains obdurate in its refusal to countenance any political attempt to suborn the European Central Bank's role as the guardian of monetary rectitude. The French President's attempt to cajole his partners into an exchange rate management policy also drew a rebuke from Luxembourg where the finance minister, Luc Frieden, rejected any suggestion the euro was too strong. "I think this reflects the fundamental data of the European economy and I highlight that a year ago we thought that the euro was incredibly weak," he said.
He might have reminded President Hollande that it was the ECB's intervention, the Bank's decision to offer unlimited guarantees to the euro zone sovereign bond markets, that rescued the currency last year. He might also have commented that a single currency must have a single value, not one that is adjusted from time to time to suit the needs of France.
Carl Mortished