Currency risk remains for euro-zone despite surging economies

Posted On: May 13, 2011
Europe's monetary union, 17 members strong, saw its gross domestic product increase by 0.8 percent on the strength of the German and French economies, Bloomberg reported. The fastest growth since 2010's second quarter in the euro-area included better-than-expected expansion in its most productive states, with a 1.5-percent uptick over the past four months by Germany and a 1 percent boost in France.

In addition, a raising of borrowing rates by the European Central Bank over the coming year, by even more than expected on May 9, is projected by a Swiss index, according to the news source. This increase, combined with a hike in rates from the benchmark low of 1 percent to 1.25 percent in April, pushed the euro up against its principal trading partners today, while the single currency fell versus the dollar in foreign exchange markets.

The euro, however, pared its gains amid lingering worry about Greek, Irish, and Portuguese debt crises, The Wall Street Journal noted. This fear may decrease if the Greek situation does not worsen over the weekend. Also, momentary confidence in the euro spurred activity in foreign exchange trading - especially in currencies with high risk, such as those of Asian countries.  

Category: Industry News


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