Mundell: Euro too high against dollar

THE euro is overvalued against the dollar, Nobel Prize laureate Robert Mundell said in a newspaper interview.

“The euro is currently overvalued,” said Mr Mundell, who won the Nobel prize for economics in 1999 and is often credited as the intellectual father of the euro for his research on optimal currency zones.

Mr Mundell noted that after being launched at a rate of $1.18, the single European currency fell to $0.82 before appreciating to $1.60.

“It is crazy, completely absurd, that the euro’s exchange rate against the dollar can double in just a few years,” he added in an interview with Germany’s Frankfurter Allgemeine Zeitung.

He said that he would like the Group of Seven (G7) leading economies to recognise that the architecture of the global currency system needed to be changed and to make moves towards creating a world currency.

“We need a better world currency system,” he said.

Mr Mundell said that he did not expect a protracted period of high inflation.

“The inflation rate can rise to 4% or 5% for a time due to the oil price rise.

“But oil has already become cheaper and I expect the price per barrel to fall back below $100.”

More in this section

IE_180_logo
Price info

Subscribe to unlock unlimited digital access.
Cancel anytime.

Terms and conditions apply

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
Puzzles logo
IE-logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day. PS ... We would love to hear your feedback on the section right HERE.

Lunchtime
News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up
Revoiced
Newsletter

Our Covid-free newsletter brings together some of the best bits from irishexaminer.com, as chosen by our editor, direct to your inbox every Monday.

Sign up