Currency

According to SG Private Banking’s strategists, the interest rate differential is supporting the euro, whereas mounting incertitude is weighing on cyclical currencies.

The aim of this short article is to set the ideas straight regarding the Greek situation. Several issues are considered, the first of which being that of economic growth. If the latter does not make any progress, it will be very difficult to reach public finance stability. The second issue is about helping the Greeks improve their situation and the final issue deals with renewing that support.

According to Michael Story, economist at Western Asset, while some peripheral European countries will be unable to escape restructuring their debt, the euro is unlikely to collapse any time soon as a result, and should in the short to medium term strengthen its position as a leading currency as demand to join the eurozone grows from former Soviet-controlled states.

According to Johannes Müller, Chief Economist of DWS Investments, the next ten to twenty years will bring 3 major changes: higher rates of inflation, weaker importance of the U.S Dollar and an increase in market volatility.

There are at least four new structural risks to consider: regulation, Middle East, euro zone’s crisis, and again the idea of a change in growth model of emerging countries.