Tags: euro | currency | economy | ECB

WSJ: Euro Thrives Despite Economic Slowdown

Wednesday, 19 Jun 2013 08:02 AM

By Dan Weil

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The protracted recession in Europe hasn't been enough to hold down the euro recently.

The currency has risen 4.4 percent against the dollar over the past month, trading Wednesday morning at $1.3399. Meanwhile, some other major currencies have dropped against the greenback.

There are several forces at work for the euro, The Wall Street Journal reports.

Editor's Note:
This ‘Third War’ Will Be the Most Destructive in History, Warns Pentagon Adviser

First, Europe remains a key cog in the world economy and financial system, and the euro is more heavily traded than most other currencies. That has made it a safe haven amid the recent global financial turmoil.

Second, the European Central Bank (ECB) hasn't implemented a huge quantitative easing program like the United States and Japan have.

Not only did the central bank leave its main lending rate at 0.5 percent at its June 6 meeting, but ECB President Mario Draghi also said the central bank isn't ready to implement negative deposit rates. Such a move could depress the single European currency.

"It's hard to bet against the euro," Sam Katzman, chief investment officer at Constellation Wealth Advisors, tells The Journal. "Until we stop printing money in the U.S., or they start, the wind is at the back of the euro."

In Germany, a survey last month by Commerzbank showed that 26 percent of companies in Europe's largest economy believe the euro will appreciate against the dollar over the next three months, while 18 percent see the euro falling, Bloomberg reports.

That's the most bullish the companies have been since February.

Lately, there has been less "discussion about a euro-zone breakup, and the market's not concerned about that anymore," Lutz Karpowitz, a senior currency strategist at Commerzbank, tells Bloomberg.

Editor's Note: This ‘Third War’ Will Be the Most Destructive in History, Warns Pentagon Adviser

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