The euro hit its lowest against the dollar in nearly a year on Thursday, with the greenback benefiting from speculation that US interest rates will be put up by the Federal Reserve earlier than expected.
The single European currency slipped below $1.33 cents – way down from the almost $1.40 it reach in May.
A number of foreign exchange experts believe it will go lower.
Adam Cole of RBC Capital Markets said: “We think the euro is about fairly valued on most measures. If in terms of its longer term competitiveness the fair value estimates are $1.20 to $1.30ish, so if it is overvalued, it’s only marginally so.”
At the same time surveys of purchasing managers at thousands of eurozone companies showed private business growth slowed more than expected this month which means the European Central Bank has to come up with more stimulus ideas.
Global currency strategist at BNP Paribas Phyllis Papadavid says it is all linked: “Certainly the weakness in the growth data will be a source of concern to the European Central Bank in their deliberations. That and the weakness in inflation we’re seeing is clearly impacting on sentiment for the euro in particular.”
So it is mixed news for European Central Bank head Mario Draghi; a weaker euro boosts exports helping the eurozone’s recovery, but only Germany is looking reasonably healthy while France, the region’s second largest economy, continues to stagnate.
