Currency war endangers EU

The still weak dollar and the prospect of the US Federal Reserve relaxing its monetary policy buoyed up the mood on US stock markets on Monday. But the EU threatens to end up between the two fronts in the currency war, the liberal daily Corriere del Ticino fears, eyeing the weak US dollar: "When a strong currency suddenly drops in valued there is generally a buffer on the other side to cushion the fall. Up to now in addition to Japan and certain emerging economies it was above all Europe that acted as a buffer, with a euro that has risen rapidly against a plunging dollar. But in the long term no one wants to play the role [of the buffer]. ... The Eurozone in particular will have to decide where it wants to aim its arrow. ... It can continue to support the US ... and demand the revaluation of the Chinese yuan. Or it can put pressure on the US to put an end to the dollar's downwards spiral. If it stands still and does nothing the Eurozone will face disadvantages from both sides."

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