Forex Flash: Draghi reiterates proper leveraging – Deutsche Bank

The talk on the valuation of the euro continued yesterday with Draghi telling lawmakers at the European parliament that the ECB will monitor the euro through its impact on price stability, a reiteration of his previous stance on the topic. The ECB's Nowotny sought to downplay talk of the euro saying that the "exchange rate is moving in a range we have had before. We have had no special developments. There is a euro appreciation against the yen but not to a dramatic extent".

“In deciphering Draghi's speech, which covered a wide-range of topics, the ECB President described Ireland's IBRC promissory note exchange as a positive step for Ireland but added that the deal will be reviewed by the ECB in its annual assessment later this year.” wrote the Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank. Draghi reiterated that he expected a gradual growth recovery in the euro zone later this year. On the topic of bank deleveraging, Draghi commented that "proper deleveraging" is crucial, but that the foremost policy challenge was to increase the flow of credit. Questioned on whether Europe could adopt a BoE-inspired Funding for Lending scheme, Draghi warned against imposing lending conditionality on banks, saying that it could force lending to the "wrong borrowers".