GIS Dossier: The strangely resilient euro

Table of effective exchange rates for the euro, the U.S. dollar, the yen and the renminbi
The euro has traded in a narrower range than its major global peers (macpixxel for GIS)
  • The euro’s gentle decline is an opportunity for exporters but reflects poorly on Europe
  • A tougher policy stance by the U.S. Fed has put the ECB on the spot
  • Brussels and Frankfurt hesitate for the same old reasons – politics and protectionism

This is the fourth in GIS’s new “Dossier series, which aims to give our subscribers a quick overview of our analyses of key topics, regions or conflicts. This compendium evaluates the euro’s performance – both good and bad – amid the problems afflicting the euro area in recent years, based on a selection of reports for GIS by Professor Enrico Colombatto.

Over the past five years, in the aftermath of the global financial crisis of 2008, the euro area has been rattled by at least four aftershocks – the Greek debt crisis, the banking crisis, the European Central Bank’s extraordinarily loose monetary policy (quantitative easing) and Brexit. Amid this turmoil, the euro as a currency has held up remarkably well. If one considers the real effective exchange rate data, the euro in January 2017 was only 1 percent weaker than a year earlier, and 2 percent down from January 2015. It had a very bad year in 2014, when the single currency lost some 9 percent (matching its slide in 2010, the worst year of the European debt crisis).

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