The Euro about to collapse? So why is the exchange rate not changing?

R

RMCF

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Sometimes world economics confuses me. Could someone answer this in Economics101 terms?

We have been hearing that the Euro is on the verge of collapse and that its been on its last legs for ages.

So I was wondering, why has the exchange rate between it and the dollar or sterling remained fairly steady over the last few months?

Surely if a currency was days away from failing then it would plummet in the exchanges?
 
I agree with you very odd i have been thinking the same, it sort of says that the markets dont believe it will crash and so they are all just trying to make a few euro by stocks and shares moving up and down, I think they seem to be having fun.. then the Germans and french seem to be seeing how long they can string it out just so they can force us all to hand over more power to them.
 
Sometimes world economics confuses me.
Click to expand...

You are not the only one.

why has the exchange rate between it and the dollar or sterling remained fairly steady over the last few months?
Click to expand...

This had not occurred to me until last night in the pub, when someone asked me was it the hedge funds who were behind the speculation against the euro. But I said that it hadn't moved significantly against the other currencies. Then I was asked "So how come people are saying it will collapse?" . I was stuck.

The reality is that many commentators expect Ireland and a few others to leave the euro, but that the euro will continue without us.
 
Partially the reason the Euro hasn't fallen off a cliff is scarcity ( It has fallen BTW http://www.x-rates.com/d/USD/EUR/graph120.html). Anyone buying goods from the euro zone needs Euro to purchase them, the value of the goods (i.e. BMW's or Italian cheese etc.) creates an inherent value for the Euro. Europe makes lots of things people need Euro's to buy, not to mention that you need them to visit Europe.
 
I have been saying this since the crisis started - "if the euro is in crisis, it's not showing up in the exchange rate"

All ER published by ECB here daily:

http://www.ecb.int/stats/exchange/eurofxref/html/index.en.html

One explanation: the fiscal deficit and debt situation are just as bad in the USA and UK, so that may be why their currencies haven't got much stronger.


Another point: the euro has weakened a bit from 90p back to 85p, also down towards 1.30 USD.

Also, it has fallen against CHF and gold.
 
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