Europe’s single currency is taking a tumble on foreign exchanges despite moves towards lifting the lock-down that has paralysed continental economies.
In the last month, the euro has lost ground against the dollar, the yen and even sterling, although the UK is persisting with social and economic restrictions to try to contain the coronavirus outbreak.
One source of euro weakness may arise from reports that the European Central Bank (ECB) is planning to widen the types of bonds it is prepared to buy under its €750 billion emergency purchase programme to try to stabilise the economy during the epidemic. According to the Financial Times, the ECB, which has already expanded the list of securities it is prepared to purchase, will buy riskier assets, such as corporate paper that is sub-investment grade, better known as junk bonds.
Sterling gains over the month
This morning the euro was up 0.16% against the dollar at $1.0842, but a month ago, on 27 March, a euro bought $1.1142, and three months ago, on 27 January, it was worth $1.1019.
Twelve months ago, on 29 April 2019, the single currency traded at $1.1186.
Against the Japanese yen, the euro was down 0.17% this morning at 116.159 yen. A month ago, on 27 March, the euro bought 120.235 yen, and three months ago, on 27 January, it changed hands at 119.995 yen. Twelve months ago, the euro was worth 124.935 yen.
Sterling is one reserve currency against which the euro may have been expected to perform strongly. Not only are continental economies such as those of Germany, Spain and Italy closer to restoring some semblance of normality, but trade talks between London and Brussels seem to be making little progress. However, even the pound has gained ground against the euro during the last month.
Lagarde sets out emergency measures
This morning, the euro was worth £0.8718, down 0.4% on the previous close. A month ago, on 27 March, it traded at £0.8946.
Over a longer timescale, however, the euro has strengthened against the pound – three months ago, on 27 January, it was worth £0.8440 and 12 months ago it traded at £0.8648.
Earlier this month, ECB president Christine Lagarde, former managing director of the International Monetary Fund, described the measures being taken by the bank to steady the economy. In a two-pronged response, she said, the ECB had beefed up its existing asset purchase scheme and had launched a Pandemic Emergency Purchase Programme (PEPP), “a new temporary asset purchase programme for private and public sector securities”.
Ms Lagarde added: