You're talking about currency formatting while they are talking about currency value. In essence, you're both correct.

They are correct in that if you're displaying a currency value, you have to know which currency it is in, right? It wouldn't make sense for the server to be "unaware" of the locale of the value.

That said, your comment sidesteps that issue and addresses how the number itself is displayed, since ultimately the value itself is a number, but different locales display numbers differently.

So the person you're responding to is asking: since the server ostensibly already knows which currency it's in, shouldn't it already be formatting the value appropriately, and that's more a question of where one thinks localization formatting should ultimately live in web app context.