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Draghi: Exchange rate is not a polict target

ECB head Mario Draghi visited the European Parliament on Monday to take part in two hearings before the Committee on Economic and Monetary Affairs, one on the central bank’s monetary policy and the second on systemic risk.

He assured that the exchange rate is not the central bank’s policy target, but that it is important for the evaluation of price stability and growth. This way Mario Draghi referred to the G20 meeting held last weekend, which focused on the issue of currency manipulation and during which the participating nations pledged to refrain from resorting to competitive currency devaluation.

He also said that Europe "entered 2013 in a more stable financial environment than in recent years" but at the same time he warned that the risks to the European economy were still tilted to the downside. He listed the weakening of exports, the failure to timely implement structural reforms by EU governments and geopolitical issues as the three main threats.

Mario Draghi reiterated that the ECB’s monetary policy stance would remain accommodative.

Forex: EUR/JPY around 125.00 after digesting Draghi

After its rally to as high as 125.89 in early European session, the EUR/JPY has been finding support for its gains at 1.25.20 zone as it tries to quote around 125.50. The market dived a little on ECB's Draghi speech before the European Parliament, but the cross has already retraced that movement back to 125.50.
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Italian voters have braced for the impact of an upcoming onslaught of tax-cut promises and attacks on the European Union as the four leading candidates begin the final stretch of the campaign, taking to airwaves and a mad scramble to visit to all corners of the republic before the polls are opened.
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