Thursday, 13 May 2010

EUR Still Low, but European Exports May Gain Boost

A weakening EUR is having a positive impact on the price competitiveness of Euro-Zone exporters, boosting their sales of goods to countries outside the euro bloc, the European Central Bank (ECB) said Thursday.

Exporters may benefit from improved price competitiveness in light of the EUR's recent depreciation, according to the ECB in their latest monthly statement. When measured against a basket of currencies from the Euro-Zone's main trading partners, the Euro has tumbled by over 10% since the Greek debt crisis erupted in early December.

Many analysts and investors believe the EUR is poised for further weakness and may possibly be subject to very sharp drops, as the currency bloc's swelling debt problem has raised questions about the area's cohesion. In the forex markets, the Euro retreated from earlier gains, as investors remained sceptical about debt reduction and economic growth in the region.