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UPDATE 1-France says Britain should do more for sterling

Published 01/21/2009, 01:47 PM
Updated 01/21/2009, 01:48 PM
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(Adds more Lagarde, British comment, pound rates)

PARIS, Jan 21 (Reuters) - French Economy Minister Christine Lagarde said on Wednesday the Bank of England should take more steps to support sterling.

"I note the Bank of England is doing what it can, but its monetary policy and management of rates ... have not been particularly efficient for supporting the currency a bit more," she told a parliamentary hearing.

"It would be in their interest to support it a bit."

There was "strong volatility" in sterling, the minister said, adding: "Very clearly monetary markets are worrying about how sterling is faring, looking at the British economy."

In the past year, the British pound has lost around 30 percent versus the dollar , 20 percent versus the euro and more than 40 percent versus the yen , according to Reuters data.

Such depreciation, while making imports dearer, gives the British exporting industry an edge in price competition with rivals in world markets.

In London, a UK Treasury source told Reuters:

"The Bank of England's policy is to target inflation, not the exchange rate." (Reporting by Anna Willard in Paris and Sumeet Desai in London; Writing by Tamora Vidaillet and Brian Love)

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