| Analysts say it won't last long The dollar exchange rate strengthened its position slightly amid analysts' expectations about US economic growth. The market is hopeful that the national economy will perform better than in the first quarter. According to the results of trading on Wednesday, one euro was given at $1.1705, which is 1.1% higher than on Tuesday. And against the yen, the exchange rate of the American currency increased from 118.63 to 119.11 yen per dollar.
The further relationship between the euro and the dollar will largely depend on the session of the European Central Bank on June 5. For now, traders are preparing for the ECB to lower the interest rate, which is currently at 2.5%. This could negatively affect the position of the American currency, especially since many European economists do not consider the strengthening of the euro as a potential threat to economic stability in the eurozone. They expect that the ECB rate cut will be perceived by the currency market in favor of the euro if traders look at this event as a stimulus for reviving the economies of the European Union countries. ECB chief economist Otmar Issing believes that the euro's rise against the dollar is not dangerous and there is no reason to worry. He believes that further strengthening of the European currency gives the ECB more freedom to maneuver in monetary policy and has the effect of curbing inflation. The President of the Bundesbank, Ernst Welteke, shares the same opinion (he is also a member of the ECB's governing council).
American economists, in turn, are seriously concerned about the weakening of the national currency and expect appropriate action from the US Federal Reserve System (FRS). The President of the Federal Reserve Bank of San Francisco, Robert Parry, believes that the US Reserve still has room to lower the rate, despite the fact that it is already at its lowest level in 42 years. Weak economic growth and inflation, the banker believes, may prompt financial policymakers to lower rates again. Currency specialist at Credit Suisse First Boston Satoru Ogasawara believes that a rate cut is inevitable. "I expect that sooner or later the Fed will cut interest rates to strengthen the dollar against the euro," he said. However, according to the forecasts of CSFB specialists, in the next three months the dollar exchange rate will fall to the level of 1.2 dollars per euro. Denis UVAROV |
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