Ever since I was a little kid, currency exchange has always fascinated me. I was lucky enough to work in banking for a while, and despite me leaving the industry, I still maintain that same level of attraction I had as a kid.
Last week was one of those rare occasions in which a lot of eyes in the financial world turned to a specific currency and wondered whether if “This is it”, as in: is this the beginning of the end? The case I am referring to is the Euro, as for the second time in the last couple of years found itself trading at the rate of $1.22, a value that hadn’t been seen since July 2010.
For several years, $1.22 has been a value informally known as the equilibrium point that signals either strength or weakness. Recent trends in European economics are putting a lot of pressure on those who own the currency, given the fact that they have several elements to worry about in their hands: the faulty Greece bailout, the current issue of Spain’s bailout, Ireland’s and Portugal’s not so great macroeconomic situation, all of this reflecting in a lot of skepticism by investors, banks, and even countries who are beginning to lose faith in the Eurozone.
As always, economists are divided between reasons why the Euro will survive, or the imminent failure of the currency. Also as always, the only one who has the answer is our friend time and no one else. While there has been a lot of pressure in the past days to get answers about the future, personally I do not really see this moment as a crucial moment in the Euro’s history.
If you want to know my reasons, all you have to do is buy me dinner… for a whole year 😉
HR