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Forex pairs in this Article » (Barcelona) - Derek Halpenny, European Head of Global Markets Research at the Bank of Tokyo Mitsubishi UFJ comments that the newswires are reporting support for the euro came from the comment from ECB Council Member Weidmann who stated that the ECB will not cut rates to weaken the euro.

He writes, "No surprise there - the ECB would never do that - but if euro strength further pushes inflation to the downside from the current low 1.4% projection for next year then the ECB would be in a position to cut the refinancing rate. So Weidmann is not contradicting what Draghi said but is emphasising that inflation is the only determinant of rate cuts for the ECB."

Elsewhere, Halpenny notes that former ECB Chief Economist Jurgen Stark has written an opinion piece in Die Welt which concludes that the Irish deal of converting promissory notes to 30-40yr debt meant that the ECB effectively exceeded its legal mandate by stepping into the area of state-financing. He notes that Weidmann also expressed concern over the deal and suggested that if the deal stands, other countries may view their national central banks as avenues for alleviating the burden on banking sector debts.
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