Currencies: Euro almost at launch value against the dollar

January 9, 2015

Frankfurt (Jan 9)  The euro fell yesterday to within a whisker of its value against the dollar when it was launched in January 1999.

The exchange rate hit $1.175, its lowest since December 2005, to continue the longest run of declining values in its history. The common currency was first launched at an exchange rate of $1.1789 versus the dollar and then fell slightly before recovering in value in the early 2000s. Recent eurozone data has proved weak, with inflation falling and unemployment rising. Italy remains in recession while France has seen confidence wane. Only Spain and Germany among the major economies have appeared to gain in strength, though Berlin has failed to kickstart GDP growth and Spain still suffers from 25% unemployment.

In response to the weak data, the European Central Bank has hinted it will begin a programme of credit easing before spring. President Mario Draghi has said the ECB will do whatever it takes to maintain inflation near a 2% target. In December inflation fell to -0.2%.

However, the beleaguered 19-member currency bloc's outlook remains much the same as a year ago, which prompted analysts to attribute the euro's fall to a flight of funds from Europe to the US as investors were lured by the booming US economy

Source: NewsEdge

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