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Wednesday 27 September 2017

Draghi: Be careful with the expensive euro

The head of the ECB, Mario Draghi, once again expressed his fears of the appreciation of the euro. Speaking on Monday, Draghi said the recent volatility in the euro exchange rate is a serious source of uncertainty and requires serious monitoring.
The euro rose from 1.05 at the beginning of the year, to about 1.19 dollars, at the moment. Further growth of the single currency against the dollar and other major currencies will seriously burden the "old continent".
Draghi told the European Parliament that the economic situation of the eurozone is stable and broad-based.
Further clarification on the ECB's future policy on incentives and record low interest rates is expected to be given at the next meeting of the Bank's Monetary Policy Committee on 26 October.
It is then that investors expect specific deadlines to end the program of incentives and the gradual normalization of interest rates in the euro area.
At the moment, the ECB buys back bonds worth 60 billion euros per month.
Speculation on ending incentives and normalizing interest rates was largely the basis for the appreciation of the single currency.
However, after the strong rise in the euro, the single currency seems to be in a correction mode, and it is now back below the threshold of 1.1900 on the first day of this week.
Draghi's comments helped further depreciation of the euro, which dropped to about $1.1850.

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