BRUSSELS: The single currency weakened against the greenback on Friday amid growing expectations for further stimulus measures by the European Central Bank as ECB President Mario Draghi reiterated that the central bank will do what is necessary to ensure that inflation returns rapidly toward the goal of just under 2%.
During the day, although euro moved sideways in Asia after retreating from previous session high of 1.0763 to 1.0710, price came under renewed selling pressure and fell from 1.0728 to 1.0664 in European morning after ECB’s President Mario Draghi’s ‘dovish’ comments. Later, despite a recovery to 1.0708 in New York morning, renewed selling interest knocked price down to a fresh session low at 1.0641 before stabilising.
ECB President Draghi said in a speech in Frankfurt on Friday, ‘ECB monetary policy measures have clearly worked; growth momentum remains weak and inflation remains well below our objective of below but close to 2 percent; we cannot say with confidence that the process of economic repair in the euro area is complete; at the December governing council meeting we will thoroughly assess the strength and persistence of the factors that are slowing the return of inflation towards 2 percent; if we conclude that the balance of risks to our medium-term price stability objective is skewed to the downside, we will act by using all the instruments available within our mandate; if we decide that the current trajectory of our policy is not sufficient to achieve our objective, we will do what we must to raise inflation as quickly as possible; we consider the asset purchase programme to be a powerful and flexible instrument; it can be adjusted in terms of size, composition or duration to achieve a more expansionary stance; the level of the deposit facility rate can also empower the transmission of app; consider the app to be a powerful and flexible instrument; in making our assessment of the risks to price stability, we will not ignore the fact that inflation has already been low for some time.’
