Still too strong the euro is hampering the economic recovery

Posted on Jul 22, 2021, 12:08 PMUpdated on Jul 22, 2021, 2:55 PM

At $ 1.1780, the euro has lost 3.5% against the greenback since the start of the year, but it is stable against the Swiss franc and gained 3% against the yen. It only recorded a fall greater than that it experienced against the dollar against the pound sterling and the yuan with a decline of more than 4%. The European currency remains at a historically high level despite the pandemic and the support measures of the European Central Bank (ECB) which is meeting today. The publication of its press release (monetary status quo) raised the euro slightly from 1.1795 to 1.1815 dollars and then back to 1.1780 dollars.

The ECB seems to have little influence over its currency through its communication and its commitment to keep rates low as long as inflation does not rise sustainably. It is even ready to tolerate a transitional period when the rise in prices “moderately” exceeds its objective of 2%. The ECB forecasts that inflation will be 1.5% this year, 1.2% in 2022 and 1.4% in 2023. European interest rates could remain at a very low level for more than two years and half unlike the United States where they could be raised from next year.

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