Reuters: ECB quietly pins its hopes on falling euro

07 October 2014

Grappling with an ailing euro zone economy and stagnant prices, the European Central Bank is hoping that help will come from something it cannot control: the value of the euro.

Grappling with an ailing euro zone economy and stagnant prices, the European Central Bank is hoping that help will come from something it cannot control: the value of the euro.

As Washington prepares to stopper the supply of cheap money that has been helping it revive the United States, the euro has started to fall steeply against the dollar.

And that's just how the ECB likes it.

With prices in Europe rising at their slowest in five years and its economy stubbornly dormant, Frankfurt is starting to use similar tactics to those used by the Federal Reserve - pumping cheap money into the system in the hope of awakening it.

But those efforts have at best an uncertain outcome. Now, however, the divergence of approach on either side of the Atlantic has presented the euro zone with an alternative that works - a weaker currency.

Full article on Reuters


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