There are actually two things to be concerned with in the recent news about the Euro (single currency) hitting a decline which is the lowest in 11 months against the US dollar and the Japanese yen, the Euro has also hit a 10 year low against the Japanese yen. This is causing some amount of concern but on a brighter side, Italy has good news which gives a bit of hope to a doom-filled future.
In fact, the Euro fell by approximately one percentage point against both the yen and the dollar. In relation to the USD, the Euro is now being valued as being worth $1.291. The reason for this appears to be that banks in the eurozone are hoarding bailout cash which was injected into the economy the ECB, the European Central Bank. They are doing this to pad future problems, which wasn’t the reason for the bailout in the first place. Te money was distributed to stimulate the economy in the eurozone by lending it out.
Earlier last week Italy was bringing cheerful expectations since they underwent a debt auction that reduced the country’s short term borrowing by approximately 50%. They sold bonds and bills and this is said to have been the first of the tests in regards to market outlook and sentiment. There was some questions which had been previously asked of the Italian government why they hadn’t made previous attempts to reduce the debt but with this latest accomplishment some amount of hope has been restored.
Unfortunately, hope is still lacking for the rest of the Eurozone because those countries have taken money meant to stimulate economies and are hoarding it instead. Depending on Italy’s success, those other countries may see that it is possible to reduce short term borrowing and begin to lend again as the money was supposed to allow for. This information may be forthcoming by as early as the first weeks in the new year.