Italian Economy to Benefit from Weakening of Global Currencies

The significant slide of the common currency versus its US counterpart and other primary international currencies can be beneficial for Italy’s currency and the country’s economy as well.

The euro relinquished less than one quarter of its value ranged against the US dollar in 2014. This was from the high of 1.395 U.S. dollars for every euro in March of 2014 to a one-day low of 1.058 dollars per one euro exactly one year later.

Trading levels yesterday correspond to the lowest position for the common currency since 2003.

It is below 18 months after the euro officially replaced Italy's lira, German mark, French franc, and other currencies of European nations.

The shared currency lost sizeable ground to other global currencies like the UK Pound Sterling, Swiss Franc, Chinese Yuan, and Japan's Yen. On the Russian ruble has declined and lost to the euro.

This trend is probably a boost for Italy's sluggish economy since it is cheaper for people outside the 19-member bloc to purchase Italian-made merchandise and consumers from these countries to travel to Italy.

However, primary raw materials (oil and natural gas) are valued in US dollars, making them more costly.

Although the weak currency makes it easy for consumers overseas to purchase Italian commodities, it is harder for Italian citizens to buy products from other nations with stronger FX notes. These include the United States and China which happen to be the two biggest trading partners of Italy outside the euro region.

The profit on standard 10-year government bonds at the end of trading was a very small 1.28 percent. This is a lift for Italy which subsists on low borrowing costs.