Eurozone Members’ Budget Struggle Affects Currency

The euro declined today versus virtually all of 16 main traded currencies as European Central Bank officials stressed on the economic difficulties faced by multiple countries using the single currency, declining appetite for traders to purchase assets in the region.

The growing budget deficits in southern European nations using the euro are influencing the currency’s rate on an exponential scale as concerns regarding the economic future of countries like Greece, Portugal and Spain are shunning investors from the Eurozone. The euro, which was said to be a substitute for the U.S. dollar in 2008 and 2009 as the global slump unfolded, continued to lose its attractiveness this week as European Central Bank President
Jean-Claude Trichet made a statement with a tone of uncertainty regarding the economic outlook in the region, but supported Greece’s measures to freeze wages and change pension laws, measures which are already causing social tensions in the country.

The Eurozone members budget deficit situation is far from a solution, and its aggravations are likely to set the euro down versus currencies regionally and globally, according to most analysts and traders, which are already abandoning investments in the region.

EUR/USD traded at 1.3762 as of 16:35 GMT from a previous rate of 1.3908 yesterday. EUR/CHF fell to 1.4659 from 1.4721.

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