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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: smolejv@gmx.net who wrote (13967)	1/26/2002 10:09:33 AM
From: AC Flyer	Respond to of 74559

DJ: The key problem for the Euro, imo, is that it has subsumed one very powerful, well managed currency - the DeutscheMark - but also a number of weaker, less well managed currencies - e.g. the Lire. The question is, will it trade essentially as a "weighted average" currency, or will it trade at the lowest common denominator - e.g. like the Lire. Much depends on the political processes that influence the European Central Bank and the way in which monetary policy is set for Europe. My opinion is that European monetary policy will initially follow a mid-course, one that is overly stimulative for the stronger European economies and overly restrictive for the weaker economies, but over time will drift towards a policy that panders to the weaker economies. This will initially make the Euro look like the "weighted average" currency I mentioned above and not like the DM. Thus the Euro may trade like, say, the French Franc prior to monetary union. With a budding economic recovery in the US and higher interest rates here later this year, I see no reason for the Euro to move up against the dollar.