The pronounced decline in the euro's exchange rate since the currency's launch at the start of 1999, especially against the US dollar, has rekindled the discussion surrounding the competitiveness of the euro zone. This marks quite a shift of focus within just a short period. When the new monetary union came into being, the emphasis was on the increased significance of the corresponding economic zone, given its economic muscle and its prominent position on world markets. This was taken to indicate that the EMU economies were highly competitive. On the other hand, the drop in the euro's value since its launch is said by many to reflect a poor competitive position. This article will examine some possible explanations for the depreciation of the euro against the dollar, focussing on the competitiveness of the euro zone, particularly relative to the USA, by applying selected indicators.
Full article available only as PDF