One euro is worth 1.30 U.S. dollars: the European currency traded at minimum of march, 2007

Brussels - October 21, 2008 - The euro quoted below the barrier of 1.31 U.S. dollars for the first time since March 2007. The common European currency was affected by the growing fear of a very sharp economic slowdown in Europe. That fact would compel the European Central Bank (ECB) to cut rates, as has insisted today Citi, which recommends selling the currency community.

"While the statements by Ben Bernanke awaken the hope of a new intervention" in the United States, "in the euro zone none of this seems to emerge," said Derek Halpenny of Bank of Tokyo-Mitsubishi.

To this analyst, "with the relatively weak growth prospects, the appetite for deleveraging (repatriation of funds) will persist and the dollar will find solid support in the attitude of the U.S. authorities which suggests that the U.S. market will come first in the crisis. "

The dollar benefited from statements by the president of the U.S. Federal Reserve (Fed), Ben Bernanke, in favor of a new recovery plan in the United States. The White House declared then open to the idea of Bernanke.

It could fall to 1.26 U.S. dollars

Citi analysts have recommended openly sell euros and buy dollars. They argue that the ECB will cut interest rates to stand at 2.5% due to the economic slowdown in the region and the relaxation of inflationary pressures.

"We believe it is to us a potentially perfect storm around the euro," says Tom Fitzpatrick, head of global currency strategy at Citigroup Global Markets, in a report dated yesterday. The European currency, he says, "could fall to 1.28 U.S. dollars at the end of the year and perhaps continue until further down in 2009."

Citigroup recommends investors to sell at 1.3314 U.S. dollars per euro, with a minimum target of between 1.28 and 1.26 U.S. dollars.

My Opinion

We should do a thorough analysis of that this fall, but first we are going good with this sentence: "Citi analysts have recommended openly sell euros and buy dollars." And I can only smile, an American firm Citigroup recommends selling euros, understand that, because that would favor the American economy to come out alive.

But we have to let companies like these give us false or tendentious analysis, but it is understood to be selling euros Based on other factors not in interest of a particular company.

As I said earlier a strong euro is not conducive to European exports and therefore this will lead to a fall in unemployment, while a weak euro realativamente, would favor European exports.

But there is one factor to take into account that countries are not considering and is the internal growth of a country, but if we look at the latest data from the United States when employment began to fall, it began to deflate the American economy. That's why it's important that a healthy domestic economy is very important.

It is important that people see that you have a job with which to sustain a mortgage, buying a car, buy their whims or their needs. If people do not see that and only what you see are more and more debt, the economy will shrink.

And I'm going to have problems are resolved outside the home, but at home. With the euro falling to 1.26 that's not going to solve the problems of the American economy, only mitigate, nothing more.

Source: El Economista