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- EUR/USD: Devaluation risks for the euro as long as energy crisis is not over – Commerzbank
EUR/USD: Devaluation risks for the euro as long as energy crisis is not over – Commerzbank
The energy crisis lingers, which is a fatal signal for the common currency. Economists at Commerzbank expect the euro to remain under pressure.
The energy crisis remains a significant drag on the euro
“The energy crisis remains a significant drag on the euro, even if the ECB can convince the markets that monetary policy follows a restrictive stance. After all, high energy prices make the euro area poorer.”
“The energy crisis bears signs of a classic terms-of-trade shock in which euro area export prices must fall relative to import prices. In currency areas with flexible exchange rates, the necessary relative price adjustment takes place at least in part via the exchange rate. This means that as long as the energy crisis is not over, there are devaluation risks for the euro.”
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