Regions

Euro's currency at a cross roads

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November 4
3:40 AM 2013

The founders of the Euro had dreamt of a superpower currency that can go head to head with the US dollar, to free Europe from US economic dependence. Now, the Euro has been too strong for its own good.

The Euro had become too strong for its own good. It had recently surged 9% against the US dollar from June to October before settling at current levels. It rose 30% against the Japanese Yen within the year. This effectively placed the Euro exchange rate is too high for two thirds of the European Union member states. It had caused many countries, namely Italy, Spain and Portugal into deflation, creating debt traps for them. 

Others claim though that the Euro is not overvalued, because of the current budget surplus amounting to EUR53 billion over the last quarter and having EUR200 billion per year. 

Another major currency player, the International Monetary Fund also recommended action on some of the EU members, specifically Germany to cut its surplus to what it terms as an 'appropriate rate' as Germans tend to become defensive on such policy recommendations. It questions why it is being criticized for being good exporters. 

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