The Bank Must End the "Euro's Wild Rise"
Paul De Grauwe, University of Leuven | September 5, 2008
The downturn of economic activity in the Eurozone has come as a surprise. ++ The twin shock of the exchange rate of the euro and oil prices squeezed profits from exporting firms. ++ The opposite has happened in the US, where the export sector is booming. ++ The European Central Bank allowed this to happen by only caring about price stability and allowing massive euro appreciation. ++ The ECB should now consider giving strong reinforcement to the recent small decline in the value of the euro.
