Euro Currency to Lose Value by 2017

Analysts from Goldman Sachs the shared currency will lose ¼ of its value from present levels and set new lows at $0.80 during the last quarter of 2017.

This was countered by economists from HSBC who insist that the euro is going to increase in value to $1.20 or 15 percent during the same period.

Said estimates border on extremes as against current speculation which is generally for more weakness of the currency which is now trading at $1.06. Yet, both opinions are anchored on concrete arguments depending on how the international economy progresses.

The perspective of Goldman Sachs depends on prospects that US monetary guidelines will stabilize. In other words, the US central bank will finally increase its principal interest rate from the close to zero levels as the economy gets better. Once the Federal Reserve tightens, the scenario is for the European Central Bank to maintain monetary policy. Hence, investors will transfer money from euro zone assets to the US.

Goldman says while the US dollar is strong, money flows failed to keep in step with ubiquitous views. Company analysts assert domestic demand will increase in the euro region and shove the euro downward. They project the fair value of the euro at approximately $1.20.

The Fed is watching the dollar’s appreciation with intent. Since the US is a closed economy, the exchange rate has less bearing on the domestic market compared to the United Kingdom.

In the interim, the escalating dollar has exerted downward weight on prices of commodities which pushed down inflation as well.