Euro to Plunge Deeper on Fiscal Crisis Consequences

The outlook for the European currency is perhaps the worst since its introduction in 1999, as disparities among Eurozone members’ financial structure is likely to decline the appeal for the currency even further, since measures to bring budget deficits to the ECB’s target are likely to set several countries into a longer recession.

After the Greek crisis affected markets in the Eurozone raising concerns regarding massive budget deficits in several bloc’s members, traders became more skeptical towards interest rate hikes in the region, as a series of financial measures to be taken by Greece, Portugal, Spain and others, are likely to force the European Central Bank to maintain its benchmark interest rate at the lowest level since the Euro was introduced, considering that these measures to control the nations’ budget deficits will certainly require stimulus to avoid a new wave of recession in the region.

The euro has already lost 5 percent against the dollar this year, and despite European officials efforts to ensure the profitability of investments in the region, an exodus of capital towards other economic regions is evident since last year’s third quarter and so far this trend has a extremely high possibility of continuing to cause the euro’s depreciation.

EUR/USD traded at 1.3588 as of 16:02 GMT from an opening rate of 1.3626 yesterday.

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