Where Will Euro Go?

(Newser) - The once moribund dollar has soared 20% against foreign currencies since July, one of the few bright spots in a grim financial landscape. The dollar traded against the euro at $1.28 this morning, down from a high of over $1.60 this summer. But the dollar's rally is expected to stall in 2009, as low interest rates and the pain of a recession catch up with the greenback. More »

(Newser) - When the euro was first proposed, skeptics cautioned of the dangers of an integrated system during a time of crisis. Now that the crisis is here, the euro has performed relatively well while smaller currencies have plunged in an investor "flight to quality." As the New York Times reports, the financial crisis is leading countries that swore never to join the single currency to reconsider. More »

(Newser) - The weekend’s storm on Wall Street has prompted Europe’s central bankers to make billions of dollars available on the cheap to global money markets as a levee against a rising flood of fresh turmoil, the New York Times reports. The European Central Bank has pledged $43 billion and the Bank of England $9 billion to help stabilize markets. More »

(Newser) - The British pound has sunk to its lowest level ever against the euro since the European currency was introduced in 1999, the Financial Times reports. The fall follows Chancellor Alistair Darling's dire warning that the outlook for the British economy is the worst in 60 years. The pound dropped to $1.79 against the dollar, its lowest since April 2006. More »

(Newser) - Workers in the US are falling behind inflation while their counterparts in the 15-nation Eurozone are keeping pace, in part because of more powerful unions, the Wall Street Journal reports. But rising wages may damage the European economies, as they deter companies from hiring and in turn boost inflation. When wages are indexed to prices, an inflationary spiral is particularly hard to break,  the paper observes. More »

(Newser) - World stocks hit their lowest level since 2006 today as credit-market losses and weakening consumer confidence sent shares falling, reports Bloomberg. The big banks, from UBS in Europe to Cathay in Asia, led declines. The MSCI World Index, Morgan Stanley's indicator of global finance, has now slid into bear market territory, having lost 21% of its value since October. More »

(Newser) - Six years after scrapping the franc for the euro, one sleepy town in southern France has reverted, the New York Times reports. Says the mayor of Collobrières, population 1,600, “We lost something with the franc. We lost an identity. We moved very quickly into Europe, maybe too quickly.” Villagers also blame the euro for rising prices and find the faceless pan-European currency bland. More »

(Newser) - The dollar posted its biggest gain in almost 3 years this week, soaring 2.5% against the euro and 2.8% against the yen. This morning in London the dollar was trading at $1.54 against the euro, with analysts predicting a rise as high as $1.45 by year's end. European politicians are delighted with the greenback's resurgence; Christine Lagarde, France's finance minister, called it "very satisfying." More »