2018.02.2302:08:00UTC+00ECB Minutes Reveal Fears over Dollar Weakness

Eurozone concerns over the weakness of the dollar were laid bare in a set of European Central Bank minutes that emphasized fears the Trump administration was deliberately trying to engage in currency wars.

The account of the ECB's January monetary policy meeting also shows that its hawkish members pushed for a change in the bank's communications, arguing economic conditions were now resilient enough to drop a commitment to raise the quantitative easing programme in the event of a slowdown.

ECB president Mario Draghi called out US Treasury secretary Steven Mnuchin over his claim that a weak dollar was good for the American economy. Draghi said Washington needed to uphold the rules of the international monetary system, which forbid nations from deliberately devaluing their currencies.

Mnuchin's comments were seen as a signal that the US could ditch its strong dollar policy — which could lower eurozone exports and make it harder for the ECB to reach its inflation target.

The accounts of the ECB meeting on January 24-25, published on Thursday, reveal Draghi's fears were widely shared among the bank's decision makers. “Concerns were . . . expressed about recent statements in the international arena about exchange rate developments and, more broadly, the overall state of international relations," the account said. “The importance of adhering to agreed statements on the exchange rate was emphasised." Those agreements explicitly rule out competitive devaluations.