More recently the Brazil also again started

The euro has crossed the threshold of 1.37 dollar Friday, for the first time since March. In September, he has recorded an increase of 7.3, its highest monthly increase since December 2008, which had been marked by the adoption of the policy of "zero rate" in the United States, following the bankruptcy of Lehman Brothers. A month, the European currency has appreciated against most currencies. The only win against it are the currencies of Eastern Europe and the Swedish Crown. What is this meteoric rise Is overwhelming Five reasons to explain this phenomenon.

The policy of the Fed maintains the weakness of the dollar

The main factor responsible for the reversal of the euro is the prospect of a resumption of purchases of securities by the Federal Reserve us, or what is called the "quantitative easing". The meeting of the Committee on monetary policy in September clearly paved the way for this scenario, which is likely to be implemented as early as November. Friday, the New York Fed President William Dudley, pleaded again in this sense, considering that the high unemployment and low inflation were not in line with the mandate of the Central Bank. By purchasing of State borrowing markets, without neutralizing its action, the Fed does nothing else increases the monetary base, and thus weaken the greenback. "It must expect that the currencies of States who rotate the snowboard ticket be penalized", summarizes the team of Morgan Stanley. A weakening of the dollar American policy, the euro area seems instead towards an output of the device of crisis. More strategists consider an increase in the rate of the European Central Bank in mid-2011, or even earlier, while they anticipate no screw Tower in the United States before 2012. In the process of inflows of liquidity to banks, a notable change last week: the application for credit institutions has been relatively low, which resulted in a brutal standards of money market rates. Eonia and Euribor jumped, widening the gap with rates in the interbank market in dollar. This divergence at the same time behind the rise of the euro against the greenback.

The systemic risk appears to be lifted in Europe

The sovereign debt crisis is not resolved, but the threat of collapse of the Monetary Union has disappeared at this time. A concern of size has notably been swept (at least temporarily): that of a contagion from the Greek crisis to the Spain which, given its size, could represent a systemic risk. The markets have changed their look on this country, as evidenced by the relaxation rates and the risk premium. They also found that some political coordination was possible in Europe. After the divisions from the beginning, the Member States agreed and have found solutions to prevent the bankruptcy of one of them: a plan of 750 billion, in coordination with the international monetary fund, has been set up, a European financial stability Fund was formed and the ECB has decided to buy Greek, Irish and Portuguese State borrowing in the market (operations that it "sterilized"). This was added the publication of the "stress tests" on the banks. Finally, the efforts of countries to reduce their budget deficit and the first signs of fiscal coordination help to reduce the risk on sovereign debt in the euro area. In view of this, the woes of the Ireland do not enough weight to penalize the euro.

The big countries strive to contain their currency

If the euro is penalized in most currencies, it is also because the game is truncated at the international level. The attitude of China is particularly poorly perceived: the Asian giant, which put an end to the indexing of the yuan to the dollar, does not leave enough currency to appreciate in the eyes of its trading partners. Countries intervene on the foreign exchange market to stem the rise of their currency and sustain their competitiveness. The Japanese authorities thus purchased about 20 billion dollars on 15 September, which resulted in a decline of the yen. A new intervention is possible, as did know the Prime Minister, Naoto Kan, on the eve of the weekend. Before the Japan, the Swiss National Bank had explicitly said that it intervened in the market during the financial crisis. More recently, the Brazil also again started. Brazilian Finance Minister Guido Mantega has referred to an international "currency war" situation that pushes the real rising and threatens the competitiveness of the country. Other countries are suspected to intervene at times, particularly in Asia. The Korea not proceed to "smoothing operations", without common measure with the interventions carried out after the bankruptcy of Lehman Brothers, which had engulfed a significant share of its foreign exchange reserves.

Reserves are diversifying

A more structural phenomenon supports the single currency: central banks diversify their reserves out the dollar. The euro provides an alternative of choice, where the market is very liquid, which is an essential criterion for central banks. Between the first and the second quarter, the phenomenon is widened, despite the sovereign debt crisis. This is not necessarily sufficient to prevent the euro depreciate, but non-negligible support. In a context of resumption of the quantitative easing on three of the major global currencies - the dollar, the yen and the pound sterling-, the euro can also represent a solution against the threat of depreciation.

Intervention by the ECB is unlikely to

The euro has emerged as the designated victim of these various strategies for manipulation of exchange rates. The euro is indeed the adjustment variable where currency traders know that the chances of a share of the ECB are low. Jean-Claude Trichet, his boss, reiterate frequently that is not the level of the exchange rate but its volatility which is important. It is likely that he be questioned on this subject at the Thursday meeting. The last time the ECB intervened on the foreign exchange market, it was in 2000, to support the single currency, in consultation with other central banks.