Eurozone could be set to CRASH: Expert warns ECB has fears over rapidly rising Euro

Wednesday, September 13, 2017
By Paul Martin

THE European Central Bank fears that the Euro might CRASH after its value has been rapidly increasing against the dollar, a top economist has revealed.

Wed, Sep 13, 2017

The exchange rate between the Euro and the US dollar has been tightening throughout the summer.

Writing in the Financial Times, Italian economist Lorenzo Bini Smagh said: “The European Central Bank seems to be increasingly concerned about the exchange rate of the euro, which has been rapidly appreciating against the US dollar over the summer.

“Rightly so, considering past experience.”

Currency tends to rise and fall in cycles lasting a period of years, but a fast appreciation could suggest a sudden downturn.

A similar cycle happened between 2005 and 2008, when the Euro’s value increased by a staggering 30 per cent after the US Federal Reserve inverted its policy and the ECB raised interest rates.

But when the Federal Reserve began to raise its interest rates and the ECB signalled a possible slowdown of its asset purchase programme, the exchange rate jumped by 10 cents in less than three months.

Mr Smagh said that history seems to be repeating itself, and its not hard to imagine the direction the Euro is going to move to.

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