Euro/dollar parity at the epicenter
new europe
21 July 2007 - Issue : 739
One after the other, members of the board of the European Central Bank reassure us that the Eurozone is running a grave inflation danger. So the ECB should raise its interest rates once more, and this should be done sooner rather than later.
The last incident in this line came from a founding member of the Eurozone, the Bank of Greece and its governor, Nikolaos Garganas, who said last week that interest rates should climb higher, despite his recognising that the Euro/dollar parity has started to bite into exports and growth. On the other side of the Atlantic, there are clear signs that interest rates on the dollar will remain stable.
With this in mind, every first-year student of economics will predict an even more expensive Euro. On top of that, most of the Eurozone citizens, businesses and governments are up to their necks in debt, so it will be only banks which will cherish the time of the expensive Euro and high interest rates.
The issue has even divided France and Germany. Nicolas Sarkozy and Angela Merkel, who met recently, expressed diverging views on the expensive Euro, with the French president being quite uncomfortable about it.
Sarkozy has repeatedly slammed the ECB for its expensive Euro policies. The club of those who worry was enlarged last week to include the European Commission. Joaquin Almunia, the commissioner for the economy, expressed his worries about the expensive Euro.
He did not hesitate to mention intervention in the money market to refrain the Euro, but waived such a possibility. He drew the attention, however, of policy makers on the issue and said that future developments may not correspond to the basics of the economy.
With this, he made an obvious reference to the possibility of an even more expensive Euro, a prospect to which he obviously objects. It seems that the game with the Euro/dollar parity all the time is becoming more important.
new europe
21 July 2007 - Issue : 739
One after the other, members of the board of the European Central Bank reassure us that the Eurozone is running a grave inflation danger. So the ECB should raise its interest rates once more, and this should be done sooner rather than later.
The last incident in this line came from a founding member of the Eurozone, the Bank of Greece and its governor, Nikolaos Garganas, who said last week that interest rates should climb higher, despite his recognising that the Euro/dollar parity has started to bite into exports and growth. On the other side of the Atlantic, there are clear signs that interest rates on the dollar will remain stable.
With this in mind, every first-year student of economics will predict an even more expensive Euro. On top of that, most of the Eurozone citizens, businesses and governments are up to their necks in debt, so it will be only banks which will cherish the time of the expensive Euro and high interest rates.
The issue has even divided France and Germany. Nicolas Sarkozy and Angela Merkel, who met recently, expressed diverging views on the expensive Euro, with the French president being quite uncomfortable about it.
Sarkozy has repeatedly slammed the ECB for its expensive Euro policies. The club of those who worry was enlarged last week to include the European Commission. Joaquin Almunia, the commissioner for the economy, expressed his worries about the expensive Euro.
He did not hesitate to mention intervention in the money market to refrain the Euro, but waived such a possibility. He drew the attention, however, of policy makers on the issue and said that future developments may not correspond to the basics of the economy.
With this, he made an obvious reference to the possibility of an even more expensive Euro, a prospect to which he obviously objects. It seems that the game with the Euro/dollar parity all the time is becoming more important.
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