Euro Stability Over A Given Period

4 Pages 1088 Words

I have included a report on the current and historical fluctuations of the euro in today’s economy. I feel that it is important to know this information because of our involvement with European distributors. I wanted to find out if the historical information on the euro is economically relevant or whether it is just an artifact of historical accounting. The following are my findings on the subject.
This number is not economically relevant for many reasons. All currencies are going to fluctuate over time and change their value when compared to other currencies that are also fluctuating. It becomes an artifact of currency accounting because it is no longer relevant to today’s market value of those currencies. The relevancy of a historical number in today’s dollar value or even in financial decisions is fairly small and unimportant. It can be used to try and determine where the euro may go in the future, which can aid in financial investing decisions but other than that it can only be seen as a part of history. This makes it an artifact of currency accounting.
The fact that the euro depreciated 12.6 percent against the dollar in a six-month span only tells me that it may have been overvalued from the beginning and it just leveled itself out and came to equilibrium as most currencies do over time. The fact that the dollar appreciated over the euro by 14.42 percent tells me basically the same as the Euro dropping in value tells me, it was not calculated and determined properly at first so it leveled itself out and adjusted to the market. Another reason for the 12.6 percent drop in the euro could have been due to the unstableness of the euro when it was first introduced. Currencies can take some time to catch on after they are first introduced causing them to be undervalued, people haven’t come to trust the currency yet and are unsure how to perceive it and value it. The only relevancy in these numbers comes from the...