Wednesday, 3 September 2014 - 15:03
Euro hits lowest point this year
Relative to the Dollar, the Euro is at its lowest point in a year. One euro is currently worth $1.3115 (on Tuesday). Early this summer a redeemed euro coin yielded almost $1.40. The cheaper euro is good news for exports in the currency union. The disappointing growth figures in the euro zone put pressure on the European Central Bank (ECB) to announce measures on Thursday. They can give a boost to inflation and stimulate the recovery of the economy, but this may also have an affect on the rate of the euro. The Financial markets are waiting in suspense to find out if ECB President, Mario Draghi, will decide on Thursday to open the money tap. If the decision is made to pump extra money into the economy, the euro will be worth less as more euros will be in circulation. European exporters suffer from the strong euro because products from the euro countries are more expensive for countries with a different currency. A lower rate can therefore stimulate trade. A lower rate will cause the imports of goods and services to be more expensive for traders in the currency union, and therefore prices will rise. This will lead to a boost in inflation, which is at a dangerously low level in the euro zone.