Home Forex News The Euro Gains Against Dollar Amidst Calls for Corona Bonds

The Euro Gains Against Dollar Amidst Calls for Corona Bonds

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The Euro is seen mounting a recovery against the dollar even as the coronavirus pandemic continues to rattle the financial markets. After weeks on the receiving end, the Euro has made substantial gains against the U.S Dollar. The rally comes amidst growing talk of a new debt instrument as European nation ramp up efforts to combat the COVID-19 pandemic.

Europe’s flagship currency has risen from the $1.0700 handle at the start of the week to highs of $1.1000 against the dollar. The rally came at the back of greenback weakness after a massive rally to two-year highs last week. The dollar remains under pressure following a confirmation that Unemployment claims surged to record highs of $3.283 million in just one week.

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The Euro has been responsive to gigantic quantitative easing measures launched by the European Central Bank. The new policy measures are designed to make it easy for individual countries in the trading block to strengthen their balance sheets.

Europe has turned out to be a key battleground against the coronavirus pandemic, with Italy becoming a hot spot. France and Germany have not been spared either, with the countries reporting an increase in the number of new infections as well as deaths.

Calls for Corona Bond

In response to the Corona pandemic, a number of European countries have called for the issuance of corona bonds as part of a new debt instrument to combat the effects of the epidemic. The heads of state of Italy, France, Belgium, Greece, Portugal, Spain, Ireland, Slovenia, and Luxemburg have echoed their support for the proposed debt instrument.

However, the proposal has already elicited resentment with the likes of Germany, Netherlands, and Austria. The trio has raised concerns about the potentials pitfalls of issuing such debts with highly leveraged countries such as Italy, Greece, and Portugal.

Finance ministers from Germany, Netherlands, and Austria have already affirmed their countries are not opened to such a new debt instrument. With the trading block struggling with one of the biggest economic turmoil triggered by the COVID-19 pandemic, the ECB remains under immense pressure to initiate a new wave of policies.

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