Strong euro offers exporters new opportunities

WITH THE stronger euro having reached parity with the US dollar and even threatening to increase to a higher level, economists in South Africa are advising exporters to pay greater attention to the European currency. Both the euro and the dollar are important trade currencies for this country, but the euro is becoming more important in exports, and could be a boost to this sector of the economy in the months ahead, says Absa economist John Loos. The weakening of the dollar is not a reflection of a deterioration in the state of the US economy, but rather reflects certain structural problems that have been in existence for some time but have been overlooked by the market, he says. While a weaker dollar was probably desirable for the US economy at this stage, the series of accounting scandals in that country appeared to have finally raised the alarm bells. A weaker dollar will provide some support for US exporters, but will simultaneously curb growth in imports, he said. This will point towards South African exporters turning their attention to trading more in euro accounts, which now offered them a strong new source of income.