Euro weakened by stimulus measures

Published: 8 Aug at 5 AM Tags: Euro, Dollar,

A decision by the European Central Bank not to increase interest rates has left the Euro weaker at the end of the week. A fragile economic recovery is likely to mean that stimulus measures will remain in place for the foreseeable future. Although the decision was not a surprise, there is now a marked difference between policy tightening in the US as the economy continues on the road to recovery and loosening in Europe.

On Wednesday the euro hit a nine-month trough against the dollar of $1.3333. Since May the single currency has dropped 4.6 per cent against its US rival.

President of the ECB, Mario Draghi, said recently that pressure was also being put on economic recovery in the eurozone by the troubles in Ukraine. NATO’s head has asked Russia to avoid a war by pulling back its soldiers from the border with Ukraine.

On Thursday a Ukrainian military helicopter and Mig-29 fighter plane were brought down by Russian-backed rebels. Fears that an invasion may be imminent saw the dollar drop 0.09 per cent against the yen to 102 yen.

Elsewhere the Australian dollar lost 0.9 per cent to trade at $0.9268. The fall came following an unexpected rise in the country’s jobless rate.