PRATO, Italy (The Wall Street Journal) -- The European Central Bank has an interest in a strong currency, and the euro’s level also reflects broad global interest in the euro, Lorenzo Bini Smaghi of the ECB’s executive council said yesterday.

“We have an interest in a strong currency,” Bini Smaghi said, adding that the ECB’s main focus is on assuring price stability in the 13-member currency bloc.
The “world is betting on Europe,” he said in this town near Florence at a conference hosted by Italy’s Confindustria business lobby.
Bini Smaghi also warned conference attendees against thinking that U.S. authorities are deliberately driving the U.S. dollar down to boost the competitiveness of their exports. “I don’t think so,” he said. “It’s wrong to assume conspiracy.”
Interest by nonresidents in euro-zone securities has risen notably in recent months, Bini Smaghi said. But it makes no sense to urge people not to invest in Europe, he added.
Flow of funds figured earlier this week showed a strong inflow of foreign investments into euro-zone securities. The euro has risen sharply against the U.S. dollar in recent weeks, brushing closely to the $1.50 level in Friday trading.
Very fast, or “brusque,” foreign-exchange movements can be unwelcome, Mr. Bini Smaghi said. ECB President Jean-Claude Trichet warned Friday that “brutal” moves upward by the euro were unwelcome.
The ECB’s mandate is to keep medium-term euro-zone inflation rates “close to, but below, 2.0%.” Euro-zone inflation in October rose to a 2.6% annual rate due to a spike in food and oil prices.
“If we keep inflation low, and inflation expectations low, then real interest rates will also be kept low, and that’s what matters to businesses,” Bini Smaghi said.
Real interest rates in the euro area are currently below 2.0%, he noted. The ECB’s target for its benchmark interest rate is currently 4.0%, and the central bank has said it will intervene in money markets to try to keep markets from pushing rates above that level, as they have been lately.