Weak Euro To Benefit Larger Economies of EU

Meanwhile, data on Tuesday showed consumer prices in the euro area rose 0.6 percent on the month and fell 0.3 percent on the year in February—a decline less sharp than the 0.6 percent year-on-year fall seen in January.

Still, economists say there are some important caveats to consider when assessing the soft euro’s impact.

For one, the benefits of the weak currency are unlikely to be felt throughout the 19-member euro zone, including uncompetitive, smaller countries such as Greece that need economic growth to help tackle their debt mountains.

“One thing I would say about this move in the euro is that it really favors those in Europe that really need it the least – Germany and France,” Stephen Roach, a senior fellow at Yale University and a prominent economist, told CNBC last week. “They’ve accounted for over 45 percent of all exports over the past five years. The so called PIGS – Portugal, Ireland, Greece and Spain – they are less than half of that.”

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza