Quantitive easing and FE

Broadwoodboy

Apologies if this has been asked before. What effect will quantitive easing have on exchange rates, especially the euro? Can any budding economists out there tell me?

Tim_Nicholas

Lots of threads on this...

GBP will almost certainly weaken IMO

Really2

Depends a lot on other economys.

If someone in euroland defaults it could cause havock for the euro.

StevieJ

Depends if it works as intended or not

Broadwoodboy

Really2 wrote: »

Depends a lot on other economys.

If someone in euroland defaults it could cause havock for the euro.

There must be some candidates in the Eurozone.

Generali

Broadwoodboy wrote: »

There must be some candidates in the Eurozone.

Austria, Italy, Spain, Greece, Ireland in ascending order IMO.

dealsearcher

It's the pound that's taking the hammering at present.

If some eurozone countries are suffering the weaker countries are being well protected by the stronger countries while the pound is being left to suffer by the UK government.

Of course the low interest rates and QE are the main cause of a low pound but the government has said they want a low pound to help exports. These being from companies that are going bust on a daily basis in this country. Many of those companies in difficulties are having problems because the cost of their raw materials has gone up because the materials are imported.

John_Pierpoint

Paying foreigners a premium to monetise government debt - what do you expect these foreigners to do?

Dump the funny money back in the UK!

MrFonzerelli

Broadwoodboy wrote: »

There must be some candidates in the Eurozone.

I found this to be an interesting article.
http://www.spiegel.de/international/europe/0,1518,608985,00.html

tomterm8

Broadwoodboy wrote: »

Apologies if this has been asked before. What effect will quantitive easing have on exchange rates, especially the euro? Can any budding economists out there tell me?

It could be very little effect, because most of the major economies ( China, UK, Japan, US) are doing QE. You would expect the euro area to appreciate against most currencies, because the euro area can't QE because of its legal framework.

It's hard to know who is actually printing money, or how much. Since currency is a relative game, the country that prints the most money as a % of its money stock should depreciate fastest.

That said, the euro area appears to have major problems ahead of it at the moment, in so far as european banks are in very serious trouble.

Broadwoodboy

MrFonzerelli wrote: »

I found this to be an interesting article.
http://www.spiegel.de/international/europe/0,1518,608985,00.html

Very helpful. Many thanks.