Germany’s Bundesbank has admitted in its monthly report that the ECB deliberately devalued the euro through its quantative easing programme to get a trading advantage, an effect which was especially strong against the dollar and USA.
The central bank’s admission sent panic waves through the German media with Die Welt warning that the euro zone could be labelled a currency manipulator by Donald Trump and suffer sanctions.
The euro has lost a fifth of its value against the dollar since 2014 boosting exports to the USA.
The study in the Bundesbank report shows a strong correlation between the date when the ECB announced its Asset Purchase Programme on January 22nd 2015 and falls in the euro.
It is estimated the ECB has bought around 330 billion euros worth of government bonds and other assets between December 2015 and January 2017. The increase in supply weakened the euro currency.
Exports account for about half of Europe’s GDP compared to only about a fifth in the USA and Japan in a sign of just how much Europe’s economies have been wrecked by globalization and how weak domestic demand has become.
The main beneficiary of a weaker euro has been Germany, which is running a gigantic trade surplus with the USA.
In 2015, the USA became the most important export target of Germany companies, selling 114 billion worth of products, especially cars, machines and chemical products, accounting for 10% of total exports.
But Germany only imported 60 billion euros worth of goods from the USA, accounting for 6% of all imports.
A strong dollar has hurt US exports.