The euro has climbed during March to a record high against both the dollar and the pound. The reluctance of the ECB to cut interest rates has simply served to strengthen this trend and it looks set to continue for a while.
Euro hits record highs Times Online (6/3/08)
Euro hits new highs as ECB rejects early cut in rates Times Online (7/3/08)
Sterling hits new low against euro Guardian (5/3/08)
Dollar slides to fresh euro low BBC News Online (14/3/08)
Questions
| 1. | Explain the principal factors that have led to the appreciation of the euro against the dollar. |
| 2. | Discuss the likely impact of this appreciation on firms in (a) the eurozone and (b) America. |
| 3. | Examine whether the appreciation of the euro strengthens or weakens the case for those in the UK wanting to join the euro. |