Paris, (Business News Report)|| The euro currency reacted positively with Emmanuel Macron’s victory in the presidency of France for a second term, unlike expectations.
The euro rose against the dollar and against other strong currencies early Monday, after Macron’s re-election as money changers bet on a stronger European Union.
In the early hours of trading today, Monday, in Asia and Australia, the price of the euro rose against the dollar by 0.48%, to reach $1,0842.
Macron was re-elected on Sunday evening, with 58% of the vote, while his far-right opponent, Marine Le Pen, received 42% of the vote, while the abstention rate was 28%.
Money changers feared the uncertainty that Le Pen’s presidency would create after she defended during a televised debate last Wednesday her desire to replace the European Union with an “alliance of countries.”
“France is likely to remain an engine of growth and progress for Europe in the next five years,” said Holger Schmelding, an economist at Germany’s Berenberg bank.
John Blassar, an analyst at Mirabaud Financial and Banking Group, expected that “the single currency rate will rise against the dollar.”
For money changers, the main problems remain represented by the war in Ukraine affecting the European economy, in addition to the monetary policy of the European Central Bank, which is working slower than other monetary institutions to counter inflation and raise interest rates.
Sources told Reuters that monetary policy makers in the European Central are keen to end the asset purchase program and raise interest rates as soon as possible.
The sources stressed to the agency that ECB officials aspire to raise interest rates in July or no later than September.
They explained that the big obstacle is that the long-term expectations of inflation indicate that it will fall below the central bank target at 2%, but the new estimates that were shared with monetary policy makers at their meeting held on the fourteenth of April showed that inflation in 2024 is higher than the target.
European Central Bank President Christine Lagarde said the bank will end its asset purchase program in the third quarter and that a rate hike in 2022 is a possible issue.