The euro’s foreign exchange rate dipped against the US dollar, UK sterling and other major currencies on Wednesday after the French President Sarkozy said that a strong euro currency is hurting exporters and should be discussed with the ECB.<\/p>\n
The euro currency hit a session low of $1.3087 against the US dollar yesterday, falling around 0.3 percent on the day.<\/p>\n
Market players said the euro could come under further pressure ahead of a Spanish bond auction on Thursday, and poor demand and high yields at the auction would aggravate concerns about Spain’s fragile fiscal position.<\/p>\n
“The euro is in a very narrow trading range as we wait for tomorrow. There is a lot of uncertainty in the market and people will speculate on a bad outcome, which should be a burden for risky assets,” said Lutz Karpowitz, currency strategist at Commerzbank.<\/p>\n
The euro has traded roughly between $1.30 and $1.35 since January, and has struggled to rise above $1.32 since early April. CitiFX Wire said in a note that its traders were looking to buy the range-bound currency on dips.<\/p>\n
IMF Warns on Euro Collapse<\/strong><\/p>\n The eurozone could break up and trigger a global economic slump to rival the Great Depression, the IMF warned last night. In its World Economic Outlook report, the International Monetary Fund said the collapse of the crisis torn single currency could not be ruled out.<\/p>\n It was the first time the Washington based institution has accepted the prospect of the eurozone splitting up and follows fears over the health of the Spanish economy.<\/p>\n “Things have quietened down but there is a very uneasy calm. I have a feeling that at any moment things could get very bad again.” said IMF chief economist Olivier Blanchard.<\/p>\n Speaking at the launch of the half yearly report in Washington, Mr Blanchard said there was no plan in place to deal with a country leaving the euro.<\/p>\n<\/p>\n