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 Belgian Security Measures Foreshadow New Normal for Europe

Rising threat of terrorism, disaffected Muslim populations and open borders, along with refugee, migrant crisis, are creating perfect storm for Europe, which some analysts fear continent is ill-suited to weather

Competing Claims of Responsibility for Mali Hotel Attack

Malian authorities ask public for help in identifying gunmen killed in attack, amid conflicting claims of responsibility from multiple jihadist groups active in the country

Video Debt-ridden Refugees Await Onslaught of Lebanese Winter

Aid agencies are attempting to reduce potentially devastating consequences of freezing conditions and snowstorms that killed eight last year, including three Syrian refugees

This forum has been closed.
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.
After Paris Attacks, France Steps Up Fight Against ISi
November 24, 2015 3:04 AM
The November 13 Paris attacks have drawn increased attention to Syria, where many of the suspected perpetrators are said to have received training. French President Francois Hollande is working to build a broad international coalition to defeat Islamic State in Syria and in Iraq. Zlatica Hoke reports.

Video After Paris Attacks, France Steps Up Fight Against IS

The November 13 Paris attacks have drawn increased attention to Syria, where many of the suspected perpetrators are said to have received training. French President Francois Hollande is working to build a broad international coalition to defeat Islamic State in Syria and in Iraq. Zlatica Hoke reports.

Video US, Cambodian Navies Pair Up in Gulf of Thailand

The U.S. Navy has deployed one of its newest and most advanced ships to Cambodia to conduct joint training drills in the Gulf of Thailand. Riding hull-to-hull with Cambodian ships, the seamen of the USS Fort Worth are executing joint-training drills that will help build relations in Southeast Asia. David Boyle reports for VOA from Preah Sihanouk province.

Video Americans Sharpen Focus on Terrorism

Washington will be quieter than usual this week due to the Thanksgiving holiday, even as Americans across the nation register heightened concerns over possible terrorist threats. VOA’s Michael Bowman reports new polling data from ABC News and the Washington Post newspaper show an electorate increasingly focused on security issues after the deadly Islamic State attacks in Paris.

Video World Leaders Head to Paris for Climate Deal

Heads of state from nearly 80 countries are heading to Paris (November 30-December 11) to craft a global climate change agreement. The new accord will replace the Kyoto Protocol on Climate Change that expired in 2012.

Video Uncertain Future for Syrian Refugee Resettlement in Illinois

For the trickle of Syrian refugees finding new homes in the Midwest city of Chicago, the call to end resettlement in many U.S. states is adding another dimension to their long journey fleeing war. Organizations working to help them integrate say the backlash since the Paris attacks is both harming and helping their efforts to provide refugees sanctuary. VOA's Kane Farabaugh reports.

Video Creating Physical Virtual Reality With Tiny Drones

As many computer gamers know, virtual reality is a three-dimensional picture, projected inside special googles. It can fool your brain into thinking the computer world is the real world. But If you try to touch it, it’s not there. Now Canadian researchers say it may be possible to create a physical virtual reality using tiny drones. VOA’s George Putic reports.

Video New American Indian Village Takes Visitors Back in Time

There is precious little opportunity to experience what life was like in the United States before its colonization by European settlers. Now, an American Indian village built in a park outside Washington is taking visitors back in time to experience the way of life of America's indigenous people. Carol Pearson narrates this report from VOA's June Soh.

Video Even With Hometown Liberated, Yazidi Refugees Fear Return

While the northern Iraqi town of Sinjar has been liberated from Islamic State forces, it's not clear whether Yazidi residents who fled the militants will now return home. VOA’s Mahmut Bozarslan talked with Yazidis, a religious and ethnic minority, at a Turkish refugee camp in Diyarbakır. Robert Raffaele narrates his report.

Video Nairobi Tailors Make Pope Francis’ Vestments

To ensure the pope is properly attired during his visit, the Kenya Conference of Catholic Bishops asked the Dolly Craft Sewing Project in the Nairobi slum of Kangemi to make the pope's vestments, the garments he will wear during the various ceremonies. Jill Craig reports.

Video Cross-Border Terrorism Puts Europe’s Passport-Free Travel in Doubt

The fallout from the Islamic State terror attacks in Paris has put the future of Europe’s passport-free travel area, known as the "Schengen Zone," in doubt. Several of the perpetrators were known to intelligence agencies, but were not intercepted. Henry Ridgwell reports from London European ministers are to hold an emergency meeting Friday in Brussels to look at ways of improving security.

Video El Niño Brings Unexpected Fish From Mexico to California

Fish in an unexpected spectrum of sizes, shapes and colors are moving north, through El Niño's warm currents from Mexican waters to the Pacific Ocean off California’s coast. El Nino is the periodic warming of the eastern and central Pacific Ocean. As Faiza Elmasry tells us, this phenomenon thrills scientists and gives anglers the chance of a once-in-a-lifetime big catch. Faith Lapidus narrates.

Video Terrorism in Many Forms Continues to Plague Africa

While the world's attention is on Paris in the wake of Friday night's deadly attacks, terrorism from various sides remains a looming threat in many African countries. Nigerian cities have been targeted this week by attacks many believe were staged by the violent Islamist group Boko Haram. In addition, residents in many regions are forced to flee their homes as they are terrorized by armed militias. Zlatica Hoke reports.

Video Study: Underage Marriage Rate Higher for Females in Pakistan

While attitudes about the societal role of females in Pakistan are evolving, research by child advocacy group Plan International suggests that underage marriage of girls remains a particularly big issue in the country. VOA’s Ayesha Tanzeem reports how such marriages leads to further social problems.

VOA Blogs

World Currencies


Rates may not be current.