actually Euro was/is undervalue. the reasons why it's so soft are: 1. the gap between the economic growth rate in US and EU was kind of wide, but it's close now. 2. Huge amount of 'black' money (reported > 50 Billion) in Europe, which only could keep in cash. Since the Euro had beed adapted, such money has been changed to US$ which strenthed the US$'s position. 3. European companies issued huge amount of notes in Euro in year 1999. Those notes were changed to US$ at the first place since US$ was/is still the major currency in international trade. But from now on, thsoe companies need to pay back investors in Euro.
There are more reasons such as political and so on. Remember, when I just came here, 1Euro=1.18 US$, and it's 1 US$=1.14 Euro now. Some big financial institutes have forecasted the rate could reach 1:1 within half year or 1 year. However, I do not expect that soon, but I believe the worst time for Euro alreadt past. Actually the biggest mistake for Euro is EU should start implement the Euro cash in 1999 also, then probably that could be another story. |
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