Merkel Says Euro Is Too Low for Germany

German Chancellor Angela Merkel suggested on Saturday that the euro was too low for Germany but made clear that Berlin had no power to address this “problem” because monetary policy was set by the independent European Central Bank.

Merkel made her remarks at the Munich Security Conference as US Vice President Mike Pence looked on. They seemed aimed at addressing recent criticism from a top trade adviser to President Donald Trump, who has accused Germany of profiting from a “grossly undervalued” euro, Reuters reported.

“We have at the moment in the eurozone of course a problem with the value of the euro,” Merkel said in an unusual foray into foreign exchange rate policy.

“The ECB has a monetary policy that is not geared to Germany, rather it is tailored (to countries) from Portugal to Slovenia or Slovakia. If we still had the (German) D-Mark it would surely have a different value than the euro does at the moment. But this is an independent monetary policy over which I have no influence as German chancellor.”

The euro has fallen nearly 25% against the dollar over the past three years, touching a 14-year low of $1.034 in January. But it has since risen to roughly $1.061.

In late January, Peter Navarro, the head of Trump’s new National Trade Council, said the euro’s low valuation was giving Germany an edge over the United States and its European Union partners.

His comments came weeks after Trump himself said the dollar’s strength against the Chinese yuan “is killing us”, deepening concerns that his administration could pursue a more confrontational, protectionist approach to trade.

Merkel and other German officials pushed back forcefully at the time.

On Saturday, the chancellor said she did not want to delve into the causes of Germany’s trade surplus, noting that this was sure to be a continuing topic of discussion with US officials.

But she said both countries were proud of their products and Washington had no reason to be unhappy about the level of German imports.

“When you look around the room and see how many iPhones and Apple products are in play, I think the vice president can be completely satisfied, and Fifth Avenue is still under-populated with German cars,” Merkel said, drawing applause from the audience.