Euro (€)

The euro was created to encompass the geographic areas that were once the purview of the mighty German Deutschemark, French franc, etc. The transition to the euro went more smoothly than most expected. And as confidence in the euro has grown, its value has increased against most major currencies. The euro is getting even more prominence given the U.S. dollar’s decline, especially since August 2008. Analysts had even been suggesting that big dollar holders such as the oil rich countries and China might diversify their currency holdings out of the dollar and into the euro.

After drooping in the fall of 2008 as investors fled risk and to the safety of the U.S. dollar, the euro experienced a brief rebound against the U.S. dollar and regained some ground against the yen. However, as investors remained risk averse, they took sanctuary in the yen and U.S. dollar. The euro once again climbed during the summer and into the fall of 2009 as investors became less risk averse. In the last several months the euro has been besieged as the fiscal problems in Greece became apparent. Some analysts look at the current crisis as a test of survival for the euro. The euro rose after the successful completion of the bank stress tests in July 2010 but quickly sank as the sovereign debt problems spread to other countries including Ireland, Spain and Portugal. The euro was pummeled by continuing worries about the sovereign debt and investors’ search for safe havens in the U.S. dollar and yen. The value of the currency waxes and wanes depending upon the status of debt negotiations and central bank easing.