Foreign currency Exchange Rate Prediction for EUR

Published: Wednesday, 27 March 2013 10:00 BST - Written by David Woodsmith

STORY LINK Foreign currency Exchange Rate Prediction for EUR

According to Morgan Stanley the Euro could over the next 2 1/2 years fall close or even to parity with the US Dollar as the Eurozone enacts policies to deliberately weaken the value of the currency in a bid to bolster growth in the struggling region.

So far this year the Euro has declined by 2.6% and will continue to fall after the Cyprus bailout debacle fans fears across the region that bank deposits in Eurozone banks are no longer safe. Italy’s ongoing struggle to form a government is also having a dragging effect upon the single currency.

Economists expect the Euro to end the year in the range of $1.25 and fall to $1.19 by the end of 2014. The estimation all depends of course that further shocks will not affect the currency’s movements, something highly unlikely as the Euro crisis returns in force. Potential flashpoints for the currency are numerous with Spain, Italy and France being the main areas of concern.

Much needed signs of growth are virtually nonexistent currently with the latest data showing that Euro-area services and manufacturing output contracted more than economists estimated this month, adding to signs the region is struggling to emerge from recession. Gross domestic product in the fourth quarter fell at its fastest pace since the first quarter of 2009.

As growth is not forthcoming the Eurozone’s policy makers will likely take similar action to Japan and speed up the pace of devaluing the Euro.

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TAGS: American Dollar Forecasts Euro Forecasts