Eurozone’s State Of Currency

Economists had been predicting a business slow down in Belgium and this prediction has not only turned out to be true but the bang has been greater than what was expected. This has greatly affected the currency condition of eurozone. The confidence index of Belgium has fallen down to a six month low bringing a doom to the manufacturing industry. French business too is facing similar downturn and signs of recovery in France are really slow. The economic data that has been released from USA has an indication of the falling purchasing rates of new homes to a level that was never expected. Hence, the market remains largely dependent on the government support. The same story holds for the foreign exchange rates. According to Fed, the European sovereign debt crisis has resulted in lessening of chances of economic growth. The dollar too came under pressure, once the Federal Reserve decided about a stricter controlling of the US economy. But the pound has been in a much better position compared to Euro and this is evident from the standard of trading that it carried out yesterday. Even Sterling has earned a much better position than the US Dollar.

This shows that the Pound has been able to overcome the low position that it had been entrenched in to for the past few days. It had even lost its AAA credit rating following the emergency budget. Even the Bank of England has planned not to inject any more money in to the economy of England under its policy of the Quantitative Easing(QE). The inflation that had hit has created a percentage which is pretty above 2% of the Bank’s target. This inflation has questioned the bank’s prediction and the other committee members too do not find a change in policy to be feasible enough.

Tags:  foreign exchange Rates