The recent rise in the value of the euro could stifle the flickering signs of growth in the euro zone, according to the President of the European Central Bank (ECB) Mario Draghi — who has also tried to quash rumors about his own future.
Speaking in front of the European Union Parliament’s economic and monetary affairs committee in Strasbourg, Draghi stressed that while the exchange rate is not a policy target for the ECB, he was closely monitoring the euro’s effects on the region’s struggle since the sovereign debt crisis of 2011.
“The exchange rate remains an important driver of future inflation in the euro area. Certainly, the appreciation that took place since mid-2012 had an impact on price stability. In the present context, an appreciated exchange rate is a risk to the sustainability of the recovery,” he said.
Resting at 1.20 against the dollar in mid-2012, the single currency has appreciated close to, but has not hit, the $1.40 level in recent months with the Fed continuing to pump extra liquidity into its economy and thus lowering the value of the greenback.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.