European Central Bank (ECB) president Christine Lagarde said the recent rise of the euro against the dollar is a consequence of US President Donald Trump’s erratic policies, and an opportunity for Europe.
“It’s impressive to note that in a period of uncertainty when we should normally have seen the dollar appreciate significantly, the opposite happened: the euro appreciated against the dollar,” she told La Tribune Dimanche.
“It’s counter-intuitive, but justified by the uncertainty and loss of confidence in US policies among certain segments of the financial markets,” she added.
Echoing previous comments, Ms Lagarde said in an interview published on May 17 that “more than a threat, it is an opportunity” and that “leaders must accelerate the process of deepening the European Union”.
“At a time when we see the rule of law, the judicial system and trade rules being called into question in the US, where uncertainty is permanent and renewed daily, Europe is rightly perceived as a stable economic and political area, with a sound currency and an independent central bank,” she said.
Ms Lagarde highlighted the digital euro and the single capital market, saying “there is a groundswell more powerful than anything I’ve seen in six years in office” in both areas.
“We also need to achieve harmonisation of supervision, as we managed to do in banking,” she added.
Investors have rushed out of the US dollar so far in 2025, with the greenback falling against every other major currency tracked by Bloomberg. This largely reflects concerns over US policymaking, ranging from flip-flopping tariff policies that could hurt the nation’s economy to threats to the Federal Reserve’s independence.
Ms Lagarde is not the only ECB policymaker to say that Europe and the euro are currently having a moment. Her vice-president, Mr Luis de Guindos, has said the euro could become an alternative to the dollar as a reserve currency if Europe increases its integration efforts.
Similarly, ECB executive board member Isabel Schnabel stressed earlier on May 17 that “we now have a historic opportunity to further strengthen the international role of the euro”.
When asked about Mr Trump’s attacks on the Fed, Ms Lagarde warned against challenging the autonomy of monetary policy authorities.
“The independence of the central bank is fundamental to monetary and financial hygiene within a country or group of countries,” she said. “In every case where a central bank has found itself under the thumb of a fiscal authority, it has never ended well.”
Turning to the state of Europe’s economy, Ms Lagarde said that she is “not at all pessimistic”.
“Employment is holding up, purchasing power is improving and inflation is falling,” she said. “Consumption and investment should pick up, even if the uncertainties generated by the US administration’s announcements weigh on confidence and slow this recovery.” BLOOMBERG
Join ST’s Telegram channel and get the latest breaking news delivered to you.
