Tags: IMF | Bakker | Euro | Close | Overvalued

IMF’s Bakker: Euro 'Close' to Being Overvalued

Thursday, 21 Oct 2010 12:53 PM

The euro is “probably close” to being overvalued and any further strengthening may affect growth prospects for Europe, said Bas Bakker, head of the International Monetary Fund’s emerging Europe division.

The IMF thought the euro-dollar exchange rate was “broadly in line with fundamentals” at the time the fund prepared the regional economic outlooks released this week, Bakker said today in Belgrade, Serbia’s capital.

“Since then, we have seen further appreciation of the euro and it’s probably close to overvaluation,” he said. “If there would be further sharp appreciation this would probably affect growth in Western Europe, in eastern Europe, in emerging Europe.”

In case of a revised economic outlook, the IMF would consider the “much higher” exchange rate, he said.

The euro has gained 6.8 percent against the dollar over the past month, the biggest gain among 16 major currencies tracked by Bloomberg. The single currency rose 0.4 percent to $1.4026 as of 1:44 p.m. in Belgrade.

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The euro is probably close to being overvalued and any further strengthening may affect growth prospects for Europe, said Bas Bakker, head of the International Monetary Fund s emerging Europe division. The IMF thought the euro-dollar exchange rate was broadly in line...
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Thursday, 21 Oct 2010 12:53 PM
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