Monday, Jul 23, 2007
So what if the euro rises above $1.40? Germany's ability to improve its competitive position through a devaluation of the real exchange rate has run its course. With unemployment down sharply, conditions in the labour market are gradually returning to nor
FT.com: Strong euro 'fling' could end in German tears
Falling in love with a strong currency is not unusual for a German finance minister.I would expect Peer Steinbrück's fling to be nasty, brutish and short. Since his statement last week, the euro's exchange rate has risen even further. If the euro continues to appreciate, Germany in particular will suffer from a sustained exchange-rate overshoot, as its economy remains as dependent as ever on a successful export sector. Even though the Germans have a slightly higher exchange-rate pain threshold than the French, we are nevertheless not too far away from that threshold.
Posted by chris :-)) @ 12:29 PM (138 views) Add Comment
1 Comment
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1. Alan said...
An excellent article.
The pound hit a 26 year peak of $2.06 today (Reuters - currency).