British analysts expect euro's drop versus dollar
Azerbaijan , Baku, Oct. 7 /Trend, A.Badalova/
The European currency will end 2011 around $1.30 (from $1.34 now) before falling further to $1.20 in 2012 and to $1.10 in 2013, leading analysts of the British economic research and consulting company Capital Economics believe.
"But we wouldn't rule out an even quicker decline," analysts said in their report.
On Thursday Euro/Dollar increased significantly with 210 pips on Europe hopes. Currently the European currency is trading at 1.3428 levels.
This week the euro hit its lowest level since January amid mounting concern about the health of the eurozone banking sector, analysts said. The dollar, quite the contrary, finally got a big boost from the euro-zone's intensifying debt crisis, and the impact that the crisis.
Stresses in the financial system reflect nervousness about banks' solvency, which in turn reflects banks' exposure to sovereign debt, the report said.
British analysts believes that, even if banks do receive a fresh injection of public money to
Cope with writing down the value of their Greek government bonds, it probably won't be enough to set investors' minds at rest given the fiscal troubles faced by other larger euro-zone governments.
According to the analysts, the euro also come under pressure from a further shift in the relative prospects for monetary policy in the US and the euro-zone, reflected in an additional narrowing of the gap between the expected level of interest rates in the eurozone and the US in a year's time.
"Speculative positioning in favour of the euro against the dollar turned significantly negative," analysts said.
According to the analyst's forecasts, dollar/euro rate in the fourth quarter of 2011 will be 1.3.