E.U. faces tough questions as euro continues to slide
By Anthony Faiola
Washington Post Foreign Service
Tuesday, May 18, 2010
LONDON -- The once-mighty euro, which briefly plunged to a four-year low against the dollar on Monday, may be doomed to keep falling whether or not European leaders can contain the region's roiling debt crisis.
The euro clawed back from a deep spiral in Asian trading Monday, closing down 0.2 percent at 1.239 against the dollar. But after its slide of almost 4 percent against the greenback over the past week, analysts say the euro's continued fall over the coming months may be inevitable given the economic turmoil gripping the region.
Assuming there is no full-blown run, the decline may not be all that bad for Europe -- a weaker currency, after all, would make German BMWs and Spanish wines cheaper overseas, heightening demand. By the same token, a surging dollar would make U.S. products less competitive.
For Europe, the real danger is yet to come. If the euro's fall accelerates, investors could begin to question the viability of what was considered the world's most ambitious monetary experiment when it was introduced 11 years ago. There could even be pressure to eject members of the 16-country eurozone if they cannot get their finances in order, although there is currently no mechanism to do so.
(More here.)
Washington Post Foreign Service
Tuesday, May 18, 2010
LONDON -- The once-mighty euro, which briefly plunged to a four-year low against the dollar on Monday, may be doomed to keep falling whether or not European leaders can contain the region's roiling debt crisis.
The euro clawed back from a deep spiral in Asian trading Monday, closing down 0.2 percent at 1.239 against the dollar. But after its slide of almost 4 percent against the greenback over the past week, analysts say the euro's continued fall over the coming months may be inevitable given the economic turmoil gripping the region.
Assuming there is no full-blown run, the decline may not be all that bad for Europe -- a weaker currency, after all, would make German BMWs and Spanish wines cheaper overseas, heightening demand. By the same token, a surging dollar would make U.S. products less competitive.
For Europe, the real danger is yet to come. If the euro's fall accelerates, investors could begin to question the viability of what was considered the world's most ambitious monetary experiment when it was introduced 11 years ago. There could even be pressure to eject members of the 16-country eurozone if they cannot get their finances in order, although there is currently no mechanism to do so.
(More here.)
Powered by Blogger
0 Comments:
Post a Comment
<< Home