Euro currency is holding up well despite calls for more interest rate cuts

The euro’s currency exchange rate against other majors including the dollar is holding up well despite recent calls for more interest rate cuts that would have a weakening effect on Europe’s shared currency after yesterday’s ECB comments that further monetary easing is possible.

In a speech on Monday, ECB chief Mario Draghi commented that the central bank would watch data closely and be prepared to cut interest rates further, including the deposit rate at zero, on further signs of economic weakness.

Latest Euro Exchange Rates

As of 07:54 GMT this morning, 1 euro bought $1.30890 USD (down 0.20 percent) and against GBP a euro bought £0.84190 (down 0.04 percent). Following Thursday’s announcement the euro fell heavily against the dollar however losses have remained small.

Euro Zone Interest Rates

Last Thursday the ECB cut its key rate by 25 basis points last week to 0.5 percent and at the central bank’s news conference, Draghi said the central bank was ready for negative deposit rates. The benchmark interest rate was cut by 25 basis points to a new record low of 0.5 percent amid signs the Euro area is struggling to overcome recession with unemployment still rising and economic surveys suggesting weaker than expected growth.

“We can always cut more. We were clear on this,” Coeure told French radio station France Inter on Saturday. “We will cut again if new indicators confirm a deterioration in the situation.”

However traders warned that the move may not have much direct effect on the currency since banks are not passing on low rates in indebted countries that need help the most.

German insurers and the county’s dominant savings and cooperative banking sector also joined up to speak out against looser ECB monetary policy, saying it would have little economic impact and undermine savings needed to protect the country’s rapidly ageing population.

Losses for the euro late last week were capped before reports forecast to show German factory orders and French industrial production both fell in March from the previous month. German orders probably slid 0.5 percent, while French activity contracted 0.3 percent, according to a recent survey.

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Euro currency is holding up well despite calls for more interest rate cuts