The euro broke the 1.50-dollar mark for the first time ever Tuesday in the wake of lackluster US economic reports and stronger resilience in European countries. (Story: C. Norris-Trent)
According to FRANCE 24's business editor Douglas Herbert, the euro's rising value is partly due to a surprise improvement in the outlook of German business managers. It is also related to a 12-point fall in the US consumer confidence index in February.
This is not the first time the US dollar has depreciated. Its value started to fall in 2007 as the property crisis gripped America, with many households unable to repay their mortgages. The ensuing credit shortage dragged global financial markets down.
Meanwhile, the US Federal Reserve adopted a softer policy on interest rates, which has mechanically depreciated the value of the dollar compared to the euro. The Euro Zone has also shown resilience to the US subprime crisis, leading the European Central Bank to maintain relatively high interest rates.
The dollar's plummetting value has made commodities dearer, especially oil. Its price rose to a record $101.43 in New York yesterday. But FRANCE 24 business correspondent Baptiste Fallevoz sees other reasons behind rocketing oil prices: the rumour has it that the OPEC cartel will soon reduce its production, and the Turkish invasion in Iraq's Kurd region has been exacerbating tensions. "In short, all the ingredients of a surge in oil prices are there. We just have to see for how long," he said.
Date created : 2008-02-27