Further euro appreciation could weaken eurozone economy — Bloomberg

Strengthening of the euro may have a negative impact on the European Union's economy, Bloomberg columnist Marcus Ashworth says. While some experts expect further growth of the single currency, others fear the realization of such forecasts. A strong euro can slow down the already anemic recovery of EU GDP, Ashworth emphasizes.

The expert does not exclude that the European currency gains several advantages as the dollar declines. However, the negative consequences of its excessive strengthening would be far greater, he believes. This is evidenced by the past experience and statements from former European Central Bank (ECB) President Mario Draghi.

According to Ashworth, many are mistakenly linking the weakening of the dollar against the euro with a gradual shift of the world's reserve currency status. However, the expert does not see enough evidence of such a scenario. Moreover, the annual ECB assessment shows that gold is ahead of the euro in terms of its importance in central bank reserves.

The situation is not alarming at the moment, but the risks of the euro's rapid strengthening remain. ECB Vice President Luis de Guindos has warned about the danger of the European currency rising above 1.20 dollars.