Euro gains a result of ECB Bank Test
The Euro gained traction and reached a two-year high against the US dollar this month, according to a report by Bloomberg. The surge was attributed to moves by the European Central Bank (ECB) to audit the European bloc's financial system. The ECB's move encouraged lenders to bring back oversees assets.
Mario Draghi, ECB president, said last Oct. 30 that the bank will not hesitate to fail lenders if the bank would found out that they are not solvent.
"Banks with huge positions in foreign currency-denominated assets will raise eyebrows during the asset-quality review. These banks will continue to sell offshore assets and buy back the currency, pushing it to very high levels relative to fundamentals." Hans Redeker, head of Morgan Stanley's global currency strategy in London, told Bloomber in an Oct. 29 phone interview.
The Euro is considered to be the best performing currency this year. It rose to 6.7%, as compared with nine of its peers, according to Bloomberg Correlation-Weighted Indexes.
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