Nouriel Roubini : Given the economic and financial difficulties of the Eurozone, the euro should be weakening. There is a sovereign risk, risk of a break up. The European central bank is easing monetary policy while the FED for the time being is on hold. On a fundamental basis while Germany can live away with the euro at current level because it is over competitive, the countries in the periphery of the Eurozone left to a chance to survive in the Eurozone have to have a much weaker value of the euro.
The euro should be falling on a fundamental basis towards a parity with the US dollar to give a fighting chance for Greece, Ireland, Portugal, Italy and Spain to survive in the Eurozone. In the next few months as these economic and financial difficulties of the Eurozone are going to become more exacerbated and the policy solutions are going to be limited, then the euro is going to weaken relative to the US dollar.
Thursday, January 12, 2012
