Euro is ‘doomed’ as currency woes resurface

DUBAI - Lars Seier Christensen, co-chief executive officer of Danish bank Saxo Bank, said the euro’s recent rally is illusory and the shared currency is set to fail because the continent hasn’t supported it with a fiscal union.

By Mahmoud Kassem (Bloomberg)

Published: Tue 19 Feb 2013, 9:01 PM

Last updated: Sat 4 Apr 2015, 7:51 AM

“The whole thing is doomed,” Christensen said yesterday in an interview at the bank’s Dubai office. “Right now we’re in one of those fake solutions where people think that the problem is contained or being addressed, which it isn’t at all.”

The euro has gained 8.2 per cent versus the dollar in the past six months and reached as high as $1.3711 on February 1, the strongest since November 14, 2011. The European Central Bank forecasts the euro-area economy will shrink 0.3 per cent this year and ECB President Mario Draghi has said the currency’s gains pose a risk for growth and inflation.

While the euro has strengthened, the economies of Germany, France and Italy all shrank more than estimated in the fourth quarter. Ministers from the 17-member euro area met during the week to discuss aid to Cyprus and Greece as a tightening election contest in Italy and a political scandal in Spain threaten to reignite the region’s debt crisis.

“I’d be a bigger seller of the euro at anything near 1.4,” according to Christensen, who said he isn’t making any speculative bets against the currency.

The euro declined 0.2 per cent to 1.3332 against the dollar, falling for a fourth day. France is grappling with shrinking investment, job cuts by companies such as Renault and pressure from European partners to speed budget cuts. While Germany expanded 0.7 per cent last year, France posted no growth and Italy probably contracted more than 2 per cent, the weakest in the euro-area after Greece and Portugal, according to the European Commission.

The economy is on the brink of its third recession in four years and the highest joblessness since 1998.

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