Germany’s chancellor warned a weak dollar and strong euro are squeezing exporters, reviving calls to strengthen the euro’s global role via a digital currency.
Summary:
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German Chancellor Friedrich Merz warned the weakening U.S. dollar is becoming a material burden for Germany’s export-driven economy.
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Merz said the euro’s strength against the dollar is raising costs for exporters and worsening competitiveness, particularly for mid-sized firms with thin margins.
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His comments came after the dollar fell to a four-year low, with USD/EUR briefly pushing beyond 1.20 after U.S. President Donald Trump dismissed concerns, saying the dollar’s value was “great,” underscoring policy divergence.
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Merz and Finance Minister Lars Klingbeil renewed calls for a digital euro to strengthen the single currency’s global role and reduce reliance on the dollar.
German Chancellor Friedrich Merz has warned that the sharp weakening of the U.S. dollar is becoming an increasing burden for Germany’s export-oriented economy, adding to the pressures facing manufacturers and exporters already grappling with weak growth and rising global competition.
Speaking at a news conference in Berlin ahead of talks with coalition partners, Merz said he has been watching the dollar’s decline with growing concern. He argued that the currency move represents a “considerable extra burden” for German exporters, as the euro’s strength raises the price of German goods in international markets and erodes competitiveness.
The comments come as the dollar has fallen to a four-year low, at times pushing beyond 1.20 against the euro. By contrast, U.S. President Donald Trump has brushed off market concerns over the greenback’s decline, stating that the dollar’s value remains “great” when questioned about the recent slide.
Merz’s remarks echoed warnings from Germany’s export lobby. The head of the country’s main wholesale and foreign trade association said the strong euro is causing “great concern” among exporters, particularly smaller and mid-sized companies that operate on narrow margins and have limited ability to hedge currency risk. A stronger euro, he noted, makes German products more expensive globally and exacerbates existing competitiveness challenges.
Germany’s export-reliant economy has struggled in recent years, only narrowly returning to positive growth last year after two consecutive years of recession. Exporters have faced mounting headwinds from intensifying competition from China and a more uncertain global trade environment, pressures that have been compounded by the euro’s appreciation against the dollar.
Against this backdrop, Merz and Finance Minister Lars Klingbeil both called for rapid progress on the creation of a digital euro. They argued that strengthening the euro’s role as a global currency alongside the dollar would help reduce Europe’s dependence on dollar movements and provide greater monetary resilience over the longer term.
This article was written by Eamonn Sheridan at investinglive.com.