The Co-Chief Executive Officer of the Danish Bank Saxo Bank A/S, Lars Seier Christensen says that the recent rally of Euro is kind of illusory and this shared currency of Euro region is all set to fall soon. Lars added that the continent has not been able to support it with a possible fiscal union and hence, Euro is all set to depreciate in near future.
According to Lars, the entire situation for Euro looks doomed. Lars added further that many investors, at this point of time, are under a false hope that the problem in the Euro region is currently contained or at least addressed by the policy makers, however, in reality; the situation is a bit different.
In the last 6 months, Euro has recorded total gains of 8.2% against the greenback and on 1st February, it actually reached a high figure that of $1.3711, marking its best value since 14th November, 2011. Incidentally, the European Central Bank has already posted prediction of the Euro region economy experiencing a contraction of 0.3% in 2013. On last week, Mario Draghi, the President of European Central Bank stated that if Euro posts high gains, the growth and inflation of the entire region will be harmed.
Incidentally, this year, despite the gains of Euro, economies of countries such as France, Italy and Germany contracted than the initial estimates for 4th quarter of 2012. In last week, the finance ministers of the 17 member nations of Euro sat together for discussing the possibilities of giving away an aid to Greece and Cyprus. Incidentally, the current political scandal in Spain and the tough election contest in Italy have made many investors afraid of a possible debt crisis in the region all over again.
Lars has added that whatever gains Euro has made in 2013 are all because of political reasons and there have been hardly any good enough economic developments for helping Euro to surge ahead.
The situation has been turbulent for Italy as it posted results of economic contraction in 2012. The economy shrunk by 2%, marking the third worst performance in the entire region after Greece and Portugal. The economy has just not been able to generate taxes or growths and in 2013, it is not expected to meet the budget deficit target of 3% of the Gross Domestic Product.