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The euro is over-valued

Larry Fink says the euro will fall in the currency markets over the next year as the present rate is “unsustainable”
The chief executive of the world’s largest asset management business, BlackRock, has said that the euro is over-valued and will fall in the currency markets over the next year.

Larry Fink, who runs a business with over $3.7trn assets under management in 7,000 funds, said that the present rate of $1.36 to the euro was “unsustainable”.

Many businesses across the eurozone have complained about the strength of the single currency which has risen rapidly since the threat of euro break-up has receded.

The European Central Bank has also not engaged in quantitative easing, meaning the eurozone has relatively tight monetary policy compared to other leading industrial nations such as the US and Britain.

“I do believe that a EU1.36 [exchange rate] from my vantage point is unsustainable,” Fink said.
“I think Europe needs a weaker currency to really expand on potential economic growth. You will see that when we start to see more aggressive tapering next year and if there’s any need for a policy response from the ECB.

“I would think you will see a much weaker euro over the course of the next year.”

Mr Fink told the World Economic Forum in Davos that the “US economy is going to be fine” although he was worried about over-optimistic markets which have touched near record highs.

He also said that market volatility would increase throughout 2014.

Source The Telegraph

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