This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

ECB's Draghi Assessing Impact Of Strong Euro

By PAN PYLAS and DAVID RISING

BERLIN (AP) â¿¿ European Central Bank president Mario Draghi pledged Thursday to keep a close eye on the economic impact of the rise of the euro, a move that surprised many in the markets and sent Europe's single currency skidding lower.

Draghi said the recent appreciation of the euro was a sign of rising confidence in the region but he acknowledged that it could weaken economic growth.

Over recent months, the euro has risen from around the $1.20 mark to trade over $1.35 even though a number of the 17 European Union countries have sunk back into recession.

A rising exchange rate could have a major impact on the eurozone economy. It could raise the price of exports, unappetizing news for many of the region's hard-pressed businesses. That prospect of lower activity could also weigh on prices â¿¿ as would the lower import costs that the high euro would likely engender.

Several European leaders, notably French President Francois Hollande, have already started to voice their concern. And without explicitly addressing those fears, Draghi indicated there could be a policy response.

"The exchange rate is not a policy target but it is important for growth and price stability," Draghi said in a press briefing after the bank kept its main interest rate unchanged at the record low of 0.75 percent.

"We will want to see if the appreciation will alter our assessment as far as price stability is concerned," he added. "We will closely monitor money market developments."

The euro took a nosedive after those remarks, tumbling from around $1.3550 to just above $1.34.

"Draghi's biggest challenge was to show his magic skills of verbal interventions and to talk down the euro exchange rate," said Carsten Brzeski, senior economist at ING. "He succeeded."

Though the euro has clearly benefited from the region's easing debt crisis, analysts also say a more aggressive Japanese economic policy designed to revitalize that country's moribund economy has indirectly pushed up the value of the single European currency.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs