# Will the American financial strategy work and what will ECB do in reply?



## paddywhacker (19 Mar 2009)

Looks like the US and the UK are deliberatly devaluing their currencies with the strategys they are using which is leaving the Euro stronger than ever. Is it good for the Euro to have such a strong currency and will the ECB do anything in response to the US trillion cash injection yesterday?
And what way will the currencies be when the dust settles?


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## csirl (25 Mar 2009)

The devaluation will be more or less permanent - they are trying to cause inflation to reduce the real value of debts. Once people get used to a dollar or pound sterling having less spending power, there is no reason to revalue upwards - this is not to say that these economies will not be strong at some future date - just that the value of the individual units of currency will be less. 

ECB has done nothing about other non-Euro devaluations, even those in existing EU countries, so there is no evidence to suggest they'll do anything about this. It is China, rather than the EU, that loses most as China has bought a lot of US debt.


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