Euro Slides Yet Again to a Record Low Point
THE ailing euro yesterday plunged to its lowest value yet against the dollar.
The value of the embattled single currency, which tumbled to 86.9 cents, has now fallen by 25 per cent since its launch 20 months ago when it was worth $1.17.
It has fallen by a similar amount against the pound and closed yesterday at 60.4p compared with 70.4p at the launch.
Analysts said that a combination of factors was undermining the euro: Slower growth in the 11-nation euro zone compared to the United States, social unrest in France, bets by currency traders earlier this year that the euro would recover and signs that German politicians might be happy for it to stay weak to boost exports.
'It's another case of euro- optimism being dashed by events,' said Tony Norfield, a currency economist at ABN Amro in London.
The latest slide came despite signs that the German economy, Europe's largest, is growing strongly with the number out of work at a five-year low.
However, stronger than expected American productivity figures once again underlined the difference between the powerful U.S. economy and the slower recovery in the eurozone.
Market watchers are warning that the euro could fall even further. 'For the next couple of months, upward movement is unlikely and 85 cents seems quite likely,' said Michael Lewis, a senior economist with Deutsche Bank.
The euro's plunge was accelerated when Germany's Chancellor Schroeder said in a speech on Tuesday that a weak euro was good for exports.
'The current eurodollar rate is more of a reason to be happy than concerned,' he said. …