News / Economy

Euro Losing Strength Against the Dollar

An employee of a currency exchange office displays US dollars next to a 20-euro note on January 6, 2012 in Lyon.
An employee of a currency exchange office displays US dollars next to a 20-euro note on January 6, 2012 in Lyon.
Dominic Laurie

The euro has lost 5.1 percent versus the dollar over the past month. And a spate of poor eurozone economic data Friday further eroded its value, signaling a grim economic outlook for the European economy in 2012.

At 13 years old, the euro is barely a teenager. But, so far, it has had an eventful life.

At its inception, Germany, the currency zone’s biggest economy, was still digesting the huge costs of incorporating East Germany, and there were wider concerns about whether such an ambitious project of a common currency would even work.

Despite concerns, it soon matched the dollar one for one. Then shot past it. Even after the financial crisis in 2007 - and a recession soon after - it held its value.

But now a second eurozone recession is back and the markets have turned against it. Friday it hit a 16-month low against the dollar.

Jeremy Stretch a London-based currency strategist for the Canadian Bank CIBC, explains the weaknesses analysts identified several years ago are finally surfacing.

"I think those flaws were essentially being masked by the process of broader economic growth and it’s now only when we see a downturn that we haven’t seen in the majority of peoples' lifetimes that’s really underlined the sort of structural failings within the Eurozone project. It was a process designed by politicians and that’s part of the inherent flaw. The politicians didn’t design the process in the optimal way," he said.

The story may not just be euro weakness, but dollar strength. U.S. economic statistics  were depressed until fall 2011 - with high unemployment, huge and growing government debt, and a housing market still yet to recover.

But now there are signs of improvement.

On Friday the U.S. reported that it created 200,000 jobs in December, the sixth month in a row of gains. The unemployment rate is now 8.5 percent. It was 10.1 percent just over two years ago. Unlike the eurozone, the U.S. isn’t predicted to fall back into recession in 2012.

"Going back to the start of the crisis, the U.S. was the first economy to really suffer the depths of the downturn and I think the U.S. were relatively early in terms of some of the procedural measures they put in place to try to alleviate that - in terms of cutting interest rates to effectively zero  and putting in fairly sizeable injections of capital into the banking system and into the economy at large," Stretch stated. "So in essence there is an element of first in, first out.”

And looking ahead into 2012, the downsides all look to be on the eurozone. Greece may default. France could lose its AAA credit rating. Some of its biggest banks could need government bail outs. Where the euro enters its 14th year in 2013, who knows what it’ll be worth.

You May Like

Photogallery Kyiv: Russian Forces Tightening Grip on East

And new United Nations report documents human rights abuses committed by both sides in conflict More

Locust Swarms Fill Antananarivo Skies

FAO-led control efforts halted plague More

South Africa’s Plan to Move Rhinos May Not Stop Poaching

Experts say international coordination needed to follow the money trail and bring down rhino horn kingpins More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ebola Vaccine Trials To Begin Next Weeki
X
August 29, 2014 2:18 AM
The National Institutes of Health says it is launching early stage trials of a vaccine to prevent the Ebola virus, which has infected or killed thousands of people across West Africa. The World Health Organization says Ebola could infect more than 20,000 people across the region by the time the outbreak is over. The epidemic has health experts and governments scrambling to prevent more people from becoming infected. Zlatica Hoke has more.
Video

Video Ebola Vaccine Trials To Begin Next Week

The National Institutes of Health says it is launching early stage trials of a vaccine to prevent the Ebola virus, which has infected or killed thousands of people across West Africa. The World Health Organization says Ebola could infect more than 20,000 people across the region by the time the outbreak is over. The epidemic has health experts and governments scrambling to prevent more people from becoming infected. Zlatica Hoke has more.
Video

Video Asian Bacteria Threatens Florida Orange Trees

Florida's citrus fruit industry is facing a serious threat from a bacteria carried by the Asian insect called psyllid. The widespread infestation again highlights the danger of transferring non-native species to American soil. VOA’s George Putic reports.
Video

Video Aging Will Reduce Economic Growth Worldwide in Coming Decades

The world is getting older, fast. And as more people retire each year, fewer working-age people will be there to replace them. Bond rating agency Moody’s says that will lead to a decline in household savings; reducing global investments - which in turn, will lead to slower economic growth around the world. But experts say it’s not too late to mitigate the economic impact of the world’s aging populations. Mil Arcega has more.
Video

Video Is West Doing Enough to Tackle Islamic State?

U.S. President Barack Obama has ruled out sending ground troops to Iraq to fight militants of the so-called Islamic State, or ISIS, despite officials in Washington describing the extremist group as the biggest threat the United States has faced in years. Henry Ridgwell reports from London on the growing uncertainty over whether the West’s response to ISIS will be enough to defeat the terrorist threat.
Video

Video Pachyderms Play Polo to Raise Money for Elephants

Polo, the ancient team competition typically played on horseback, is known as the “sport of kings.” However, the royal version for one annual event in Thailand swaps the horse for the kingdom’s national symbol - the elephant. VOA Correspondent Steve Herman in Samut Prakan reports that the King’s Cup Elephant Polo tournament is all for a good cause.
Video

Video Coalition to Fight Islamic State Could Reward Assad

The United States along with European and Mideast allies are considering a broader assault against Islamic State fighters who have spread from Syria into Iraq and risk further destabilizing an already troubled region. But as VOA State Department Correspondent Scott Stearns reports, confronting those militants could end up helping the embattled Syrian President Bashar al-Assad.
Video

Video Made in America Socks Get Toehold in Online Fashion Market

Three young entrepreneurs are hoping to revolutionize the high-end sock industry by introducing all-American creations of their own. And they’re doing most of it the old-fashioned way. VOA’s Julie Taboh recently caught up with them to learn what goes into making their one-of-a-kind socks.
Video

Video Americans, Ex-Pats Send Relief Supplies to West Africa

Health organizations from around the world are sending supplies and specialists to the West African countries that are dealing with the worst Ebola outbreak in history. On a smaller scale, ordinary Americans and African expatriates living in the United States are doing the same. VOA's Carol Pearson reports.
Video

Video America's Most Popular Artworks Displayed in Public Places

Public places in cities across America were turned into open-air art galleries in August. Pictures of the nation’s most popular artworks were displayed on billboards, bus shelters, subway platforms and more. The idea behind “Art Everywhere,” a collaborative campaign by five major museums is to allow more people to enjoy art and learn about the country’s culture and history. Faiza Elmasry has more.
Video

Video Chinese Doctors Use 3-D Spinal Implant

A Chinese boy suffering from a debilitating bone disease has become the first patient with a part of his spine created in a three-dimensional printer. Doctors say he will soon regain normal mobility. VOA’s George Putic reports.
Video

Video India’s Leprosy Battle Stymied by Continuing Stigma

Medical advancements in the treatment of leprosy have greatly diminished its impact around the world, largely eliminating the disease from most countries. India made great strides in combating leprosy, but still accounts for a majority of the world’s new cases each year, and the number of newly infected Indians is rising - more than 130,000 recorded last year. Doctors there say the problem has more to do with society than science. Shaikh Azizur Rahman reports from Kolkata.
Video

Video Scientists Unlock Mystery of Bird Flocks

How can flocks of birds, schools of fish or herds of antelope suddenly change direction -- all the individuals adjusting their movement in concert, at seemingly the same time? British researchers now have some insights into this behavior, which has puzzled scientists for a long time. VOA's George Putic has more.

AppleAndroid

World Currencies

EUR
USD
0.7537
JPY
USD
103.79
GBP
USD
0.6032
CAD
USD
1.0957
INR
USD
60.522

Rates may not be current.