Is the Euro too weak for Germany?

The Finance Minister of Germany, Wolfgang Schaeuble commented over the weekend that the Euro exchange rate is too low for Germany, increasing its export surplus and making it less competitive on a global scale. This comment has come just days after a top aid of US President Trump said the Euro was grossly undervalued and accused Germany of exploiting the weaker currency for trade purposes, an accusation German Chancellor, Angela Merkel has denied.

All this talk from key international figures regarding the strength of the Euro makes for interesting reading for those who intend on buying or selling the single currency in an upcoming currency exchange. Due to the Euro being in such a spotlight I would suggest any clients with plans to exchange it would be wise to make their currency broker here at FCD aware.

As it stands there is no measure for the fair value of the Euro across the 19-member bloc that use it. But many economists believe that German could cope easily with a stronger Euro considering it hit a 14 year low against the Dollar last month.

Factors affecting Euro exchange rates

As the strength of the Euro across its range of economies becomes a sticking point, politics are also becoming an area of concern for many within the area. Marine Le Pen’s leadership bid has her in the news often and she appears to be a stronger candidate than French economists had hoped for. She has announced plans to remove France from the EU and stop using the Euro.

Whether her popularity impacts Euro exchange rates remains to be seen, and with the situation in the Netherlands very similar due to the emergence of Gert Wilders we could see headwinds for the Euro in future. Unlikely wins for either would spell trouble for the Eurozone in my opinion.

EU Extraordinary Summit to take centre stage

Towards the end of this week the Presidents and Prime Ministers of the Eurozone will gather to discuss the current issues affecting the union. Expect any key updates to have the potential to move Euro exchange rates.

Elections in Europe are due to begin next month and clients may wish to look to protect themselves from further political shocks. Call our trading floor number on 01494 725 353 or email me here.


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