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Is EUR rate still rising?


By observing the trend of recent exchange market, we can find the EUR/RMB rate is still steady around 7.8 after a moderate rise.



But some may think that EUR has been much too moderate in past years compared with the high rate before. You must be very concerned about the trend of EUR, so allow Panda to do the analysis:

ECB Released Signals for Interest Rate Cuts


On May 21, European Central Bank President Lagarde delivered a speech that gained significant attention from the market. Recently released eurozone economic data has improved, releasing a signal of economic recovery.


With the eurozone's largest economy, Germany may be out of the more than a year of economic stagnation, the eurozone's economic performance this year could be better than expected, to get rid of zero growth.


With the euro exchange rate continued to rise last week, the EUR/USD rate has been going up for five consecutive weeks and still likely to continue to rebound upward, even reach the 1.0930, a rather resisting point.



Germany, the eurozone's largest economy, may be able to get rid of more than a year of near-stagnation in the economy. Euro zone economy this year will grow faster than previously expected. Inflationary pressures in the eurozone have eased, providing room for the European Central Bank to cut interest rates.


With the approach of June, the market is more and more focusing on the monetary policy adjustment from European Central Bank.


The minutes of the April monetary policy meeting released by the ECB show that some officials believe that if payrolls and inflation data remain at the current relatively moderate level, “the next move will be to cut interest rates, most likely on June 6th. “This is also the date on which the ECB's regular monetary policy meeting takes place.

June is Ripe for Rate Cuts Limiting Euro Rebound


Some expert sources made predictions earlier this year that the European Central Bank would cut interest rates three times this year, 75 basis points in total, in response to low inflation in the eurozone.


They believe that eurozone inflation will not return to the target level of 2% before 2025.


ECB Executive Board member Cipollone said on May 26 that the time was ripe for the ECB to cut interest rates in June, echoing comments made by ECB Executive Board member Panetta a day earlier.


Cipollone said, “Recent data have reinforced our confidence that we will be able to reduce the restrictive stance of monetary policy.”


At 20:15 Beijing Time on June 6, the ECB will make an interest rate resolution, with markets widely expecting a rate cut.


In line with broader eurozone data, three of the eurozone's four largest economies were expected to underperform in data released on Wednesday. Only Italy saw a slowdown in price growth.


Such an outcome hampered the ECB's progress towards its 2% target, but officials have consistently signaled a 25 basis point rate cut on June 6, suggesting that one month of data is unlikely to put them off target.


Taken together, the above news shows that a number of ECB officials now believe that conditions are ripe for a June rate cut, which could limit the EUR rebound.



All in all, the recent appreciation of the euro is great news for friends who need to remit back to home countries or exchange EUR for RMB.


Although the current euro against the yuan exchange rate has risen, but the exchange rate can fluctuate every single day. It’s difficult to predict whether the euro can continue to rise. For friends in Europe who need to get foreign currencies, Panda suggests a quick move!


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