Tags: Roubini | Weak | Euro

Roubini Pushes for a Weaker Euro

Wednesday, 25 Apr 2012 11:29 AM

Economist Nouriel Roubini says the euro should be weaker than it is.

"If domestic demand is going to be anemic and weak in this fiscal adjustment because of private and public sector deleveraging you need net exports to improve to restore growth," Roubini — who believes much looser monetary policy is needed — wrote in a series of tweets reported by CNBC.

“In order to have an improvement in net exports you need a weaker currency and a much more easy monetary policy to help induce that nominal and real depreciation that is not occurring right now in the eurozone,” said Roubini.

In order to have an improvement in net exports you need a weaker currency and a much more easy monetary policy to help induce that nominal and real depreciation that is not occurring right now in the eurozone, says Roubini.

“That’s one of the reasons why we’re getting a recession that’s even more severe,” he says.

“So, can’t we think of monetary policy as helping to induce the change in relative prices that’s necessary to have a restoration of growth if domestic demand is weak through net export improvements?"

The Wall Street Journal notes that amid the recent global market turmoil, traders noted the relative resilience of the euro, which finished Monday at $1.3158, down less than 0.5 percent. The currency's strength demonstrates that, at least for now, money isn’t flooding out of the eurozone, as it was late last year.

Many investors have already slashed their investments in Europe, strategists and analysts said, reducing the likelihood of a mass exodus, the Journal reported.

The Journal quoted Steve Englander at Citi as saying: “The euro’s robustness is one of the great mysteries of modern times.”

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2012-29-25
Wednesday, 25 Apr 2012 11:29 AM
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