French Industry Minister Calls for Lower Euro

By Mimosa Spencer

PARIS--France's industry minister Tuesday called for a lower euro and said the European Central Bank's role should be reinterpreted, wading back into a currency debate that had been calmed by an agreement between the world's top finance ministers earlier in the month to refrain from competitive devaluations of their currencies.

"I am for a less-strong euro," Arnaud Montebourg said at a meeting with journalists in Paris, adding that it is "good news" the euro has recently declined against other currencies.

The single currency has fallen around 4.6% against the U.S. dollar since the beginning of February.

"I am very happy, [the decline] should continue," Mr. Montebourg added.

Earlier this year, French officials complained about the euro being too strong and making the country's exports less competitive. In a speech to the EU parliament in early February, French President Francois Hollande said the euro shouldn't be left to fluctuate according to the mood of the markets and warned that a strong euro wipes out efforts to make economies more competitive.

However, later in February, finance ministers and central bankers from the Group of 20 industrial and emerging countries agreed they would refrain from competitive devaluation and would not target exchange rates for competitive purposes. That commitment has reduced the number of comments from European politicians on the euro and the ECB.

Still, the industry minister also said Tuesday the role of the European Central Bank should be reinterpreted. The Frankfurt based institution's primary mandate is to fight inflation, but Mr. Montebourg said that within the current European treaties the ECB can be more pragmatic and less dogmatic. It should act more like other major central banks, which Mr. Montebourg said had monetized debt.

"There are efforts to be made to bring order to public finances, but thinking that the entire effort should come from taxes and spending cuts is excessive. We should share part of the effort with the monetization of debt, which is natural because it is directly linked to the errors of the banking industry which the central bank did not sufficiently monitor in the past," Mr. Montebourg said.

The industry minister also said the results of the Italian elections show that voters are rejecting policies dictated by financial markets.

--William Horobin in Paris and Katie Martin in London contributed to this item

Write to Mimosa Spencer at mimosa.spencer@dowjones.com

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