The euro fell by 3 per cent against the dollar last week, and it is now 12 per cent below the level it reached in the spring. Many economists have seen the decline in the euro as a symptom of the wider sovereign debt crisis, but actually it could prove to be part of the solution, not part of the problem. The euro is still not “weak” on the foreign exchange markets in any long term sense, and a further significant decline in its real value is not something to be feared. In fact, it would be an entirely normal response to the recession, and to the consequent monetary easing, which is now underway in the eurozone. Read more
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