Wednesday, June 16, 2010

Forget the Rhetoric: Europe Loves a Weak Euro

Forget the Rhetoric: Europe Loves a Weak Euro

Brazilian news agency Agencia Estado reports today that French President Nicolas Sarkozy finally admits that he welcomes the boost in competitiveness of euro area resulting from the drop of the Euro.

Forget all the talk about a 'strong Euro", similar to all the talk about a 'strong US dollar'. Low currencies are great to increase the exports of weak economies.

Speaking at an event for small and medium enterprises, the president said he does not worry about the fall of the common European currency. Sarkozy also said Europe's economic growth remains fragile and needs to be strengthened at the same time that public finances should be remedied. The declines in the euro has been exacerbated by fears of investors with high levels of public debt in the euro area. To try to control these concerns, the bloc's members have created a stability fund of € 440 billion to countries that may not be able to refinance solely from the markets.

Sarkozy said that the fall of the euro makes French products more competitive and it is beginning to have an impact on exports. The increase in competitiveness "goes in the right direction," the president said, adding that there is no reason for the euro area suffer from a less competitive currency.

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