Draghi dismisses talk of currency war
The Euro declined against the Dollar on Monday after the European Central Bank President Mario Draghi said economic indicators signalled further weakness in the Euro zone. But Draghi ruled out using the currency as a tool to boost the Euro zone economy after a number of Euro zone policy-makers said last week the Euro was too strong. Over the weekend, G-20 finance chiefs and central bank heads re-affirmed their commitment not to engage in a currency war.
The pound has continued to weaken against the dollar and the Euro as currency speculators bet against the UK currency. Sterling fell to a seven-month low against the dollar and a 15-month low against the Euro. The fall is due to concerns that the UK will lose its AAA credit rating and after a member of the bank of England’s Monetary Policy Committee (MPC), Martin Weale, said that sterling may need to weaken further to help the UK economy. Hedge fund and investment managers are dumping sterling because of the changes they feel could come about when the new Governor, Mark Carney takes over from Sir Mervyn King at The Old Lady in July. The pound was devalued in 2007-08 and Mr Weale said that data indicates that the full benefits of this have yet to be seen.
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