4. February 2015 / Question time: ECB Monetary Policy, Falling Euro Exchange Rate, Greek Election, Rising Franc and the Consequences

Answers by Eugen Weinberg, Head of Commodity Research at Commerzbank AG, Frankfurt.

Euro-dollar parity in sight next year

Parallel to the bond purchases by the European Central Bank worth more than EUR 1.1 trillion, the euro is continuing to fall in value. Euro-dollar parity is likely to come within reach next year. This will mean that goods produced in the Eurozone will become cheaper from the foreign customer’s perspective such as, for example in the USA or Asia. This will increase the profits of exporters who sell outside the Eurozone. Temporarily, this will aid growth in the Eurozone.

The economy is currently based mainly on lower oil prices and the depreciation of the euro. Continuing low interest rates on loans will provide little impetus for consumption in many euro countries because of high levels of household debt. The direct benefit of the ECB’s actions as a whole will remain low….

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