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Euro Drops as ECB Board Member Reiterates Low Rates

July 12, 2013 at 12:43 by Miranda Marquit

Counting 50-euro billsEuro is heading lower today as indications for continued loose monetary policy from the European Central Bank continue to come. Euro has dropped a reasonable amount, but is still off its low, and trying to stabilize.

ECB executive board member Vitor Constancio commented earlier that the eurozone is making a slow economic recovery, and that means that policy has to remain “accommodative.” Many are taking that to indicate that not only will interest rates remain low in the 17-nation currency region, but there is still ample opportunity for the ECB to ease further.

It’s also not helping the eurozone that right now issues related to Cyprus and Greece are popping up. And some question the fact that Latvia is still set to join the currency union in 2014.

The fact that a member of the ECB‘s executive board can influence the outcome of the euro today is an indication that, yes, what officials say does matter. Indeed, a paper recently published on that subject, analyzing market responses to official statements, shows that the euro’s struggles over the last couple of years are due in large part to policymaker communications.

at 12:41 GMT EUR/USD is down to 1.3037 from the open at 1.3097. EUR/GBP is up to 0.8630 from the open at 0.8626. EUR/JPY is up to 129.8135 from the open at 129.5925.

If you have any questions, comments, or opinions regarding the Euro, feel free to post them using the commentary form below.

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