2002-01-28 I too saw the value of the Euro in the paper today at 86 �(US), but I really don't think it means anything. The rises and falls of one currency to another are more psychological then practical.
Each of the European countries inside and outside of the Eurozone are small potatoes economically speaking. They do not have enough resources in their own lands to produce what they need to be affluent. Thus, they depend on each other for trade. When that trade is played by different rules in different countries and the currencies of the individual countries varies uncontrollably, that also affects the cost of trade and living in each of the countries. With 80 % of the goods produced in Europe staying in Europe, the above situation would destabilise many economies and decrease profits and stymie investments. And thus lower the standard of living Europe wide. Now, with the Euro, and not only because of the Euro, but changes in laws dealing with trade, the opening of borders and the elimination of tariffs, has made the Eurozone more profitable and less vulnerable to price uncertainties. Thus, no matter what the Euro's value is externally, the relative internal stability of the market will negate any negative pressure on the Euro from outside. In addition, when it comes to external trade, Europe is a net exporter. Thus a "weak" Euro is advantageous to increased business activity between the EU and the rest of the world. Since the Euro seems to fall relative to the dollar, the effect is commodities priced in dollars are too expensive to buy and Euro goods are cheaper and the customer is thus drawn to the Euro products. Being a net exporter, the "weakness" of the Euro when it come to buying needed necessities priced in dollars is somewhat offset by the profits earn in sales. The US, however is a net importer. A strong dollar makes foreign products cheaper than local products. With being a net importer, one would need a strong currency in order to offset the loss of export sales. Thus a strong dollar is in America's interest. So, it may be that the dollar/Euro ratio is being altered to give both sides the needed boost to end the recession. Any comments? John ----- Original Message ----- From: "Han Maenen" <[EMAIL PROTECTED]> To: "U.S. Metric Association" <[EMAIL PROTECTED]> Sent: Monday, 2002-01-28 06:26 Subject: [USMA:17698] euro is falling again > The euro is falling again because of predictions, rumours and fears. It has > dropped to about 86 dollarcents. No valed economic reason at all. A > prediction that the US economy would do better than the European > economy was enough to set this nonsense in train once again. > > Han > >
