Germany rejects French call for managed euro rate

The eurozone should not use exchange rates to boost its economic competitiveness, the German government said on Wednesday after France called for policies to cap the recent rise of the euro.

"From our point of view, exchange rate policy is not an appropriate tool to boost competitiveness," government spokesman Steffen Seibert told a news briefing here.

"The effects of things like targeted devaluation tend to be rather short-term. You can't use it to achieve a lasting boost in competitiveness," Seibert said.

A day earlier, French President Francois Hollande had said the euro's value must not be left to the whims of the market.

Speaking to European Parliament in Strasbourg said "a single currency zone must have a foreign exchange policy otherwise it will see an exchange rate imposed on it (by the markets) which is out of line with its real competitive position."

On Monday, French Finance Minister Finance Minister Pierre Moscovici said that Paris was concerned about the recent rise of the euro but would rather seek a dialogue on the issue than "launch an offensive" on the issue.

"There is no French government strategy to call into question or launch an offensive on the question of foreign currency rates," Moscovici said.

The euro has strengthened sharply in the past few months as the eurozone appeared to have finally got the better of a debt crisis which at one stage looked likely to sink the whole project.

On Friday, the single currency hit $1.3711, a level last seen in mid-November 2011, stoking concerns that it could begin hurt exports, a key growth driver at a time when the overall eurozone economy is struggling badly.

For several months some emerging countries have objected that monetary policy by leading central banks, in injecting liquidity into their own economies, tends to depress their currencies and amounts to a policy of competitive devaluation.

Analysts say that the policy of the European Central Bank is showing signs of being somewhat less relaxed and this is one factor tending to push up the euro.