In military affairs a friend of enemy is also an
enemy. Falling Euro is god opportunity for the global south to mount a
calculated move against the Euro first before embarking on de-dollarization.
Allies may be, but America would be constrained to defend Euro if attacked!
Recent recording of near parity between US$ and
Euro in exchange markets quote of one Euro=USD 1.05 is a signal that the days
of over-valued Euro are over. Fundamentals apart, Euro lacks the kind of
singular authority to admin it.
USD is managed by the America alone. Euro is managed by European Central Bank (ECB) nominated by 27 European countries which concomitantly formulates and executes European economic & monetary policy & strategy. Keeping the value of Euro is, indeed sacrosanct duty because that assists in holding inflation under control and incentivising economic growth resulting in more job creation.
Euro is in bad
way now because the three biggies Germany, France and Italy are faltering at
the seams. The former dubbed as engine of European economics
has stalled not only in terms manufacturing but also in the services sector.
The biting sanctions imposed on Russia blew back as chickens come home to
roost. PMI (Purchasing Managers' Index) as key measure is below 50 for both
Germany and France.
Cheap energy in the form of natural gas flowing from Russia came to almost nought, resulting in higher price paid for the US supply. On the one hand trade and investment flow to and fro EU Zone is steeply declining while on the other economic growth as an indicator plummets. According to IMF it was 3.4% in 2022 tanking 0.4% end 2023. Possibly this measure might be in the negative by end 2024.
Investor
confidence has moved out of EU Zone to the global south countries
such as China, India, and Vietnam and surprisingly towards Russia which was the
target of all these sanctions. Donald Trump is to assume duties as 47th
President of United States on 20th January 2024. He is reported to
be vary of the Euro and wants to see it out of busines
My take is it would be an excellent business strategy for the global south to mount an attack on Euro and unseat it as a competing currency to the USD in global trading as well as in global reserves. Donald Trump would ever be grateful. The bottom line is American dream on the supremacy of USD in perpetuity cannot be wished away.
Global south should not waste time. Instead of spending
time & treasure in the futile exercise of de-dollarization and treating America
as the chief villain better start a geoeconomics attack on Euro on the footing
of ‘friend of enemy is also enemy’. Global south can count on one
thing: Trump’s tongue in
cheek support for his European partners!
Cheers!
Muthu Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business Strategist
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