The European Union’s currency, used by 19 of the bloc’s 27 members, has shown the outright worst performance amid the currencies of the Group of Ten leading Western industrialized countries since mid-March when measured against the US dollar, Bloomberg has reported, citing currency market data.
Between mid-March and May, the euro has lost 3.2 percent of its value against the greenback, settling at $1.08 per euro, even as US authorities have pumped trillions of dollars of cash and debt into the global economy to try to soften the blow of the economic downturn caused by the pandemic at home.
In fact, the data shows that apart from the Australian dollar, which has seen a respectable 4.1 percent uptick against the dollar over the past month and a half, nearly all other currencies have lost purchasing power, with the New Zealand dollar, Canadian dollar, Swedish krona and Norwegian krone down between -0.1 to -0.8, while the British pound, Japanese Yen, Swiss Franc and Danish Krone have sunk by -1.9, -2.7, -2.9 and -3.0 percent, respectively.
Bloomberg blames the Euro’s poor performance on Brussels’ failure to “mount a joint fiscal defence” against the coronavirus, presumably including trillions of euros in cash infusions into the economy, as well as a “lack of a cohesive fiscal policy.”
The European Commission warned last week that the crisis could escalate tensions between the region’s industrialized north and crisis-prone south, and threaten the stability of the bloc itself, particularly as officials have yet to work out a long-term plan to help countries recover from the pandemic over the long term. The bloc cobbled together a €540 billion package to deal with short-term consequences of the crisis last month (with this assistance equivalent to only 2 percent of GDP, compared with stimulus equivalent to 9 percent of GDP in the US spread across several congressional bills passed last month).
In late April, Sentix, a Germany-based metric monitoring the probability of one or more countries leaving the EU over the next 12 months reached its highest indicator since 2017, heightening fears that Brussels’ lack of cohesive response may increase exit-minded sentiment.
Last week, Germany’s constitutional court ruled that the European Central Bank’s policy of supporting some countries in the Eurozone more than others via the mass buy-up of government bonds emitted by these countries disproportionate to the size of their economies was illegal. Speaking to Sputnik about the court’s decision, French economist Charles Gave warned that it would push EU members toward “a very predictable clash in the Eurozone” between those countries seeking to save the euro at all costs, and the rule of law and fiscal responsibility in each member country. This week, financier and vocal EU proponent George Soros warned that he was "concerned about the survival of the EU" amid the court's ruling.