Stabilizing the dollar-euro exchange rate can only be achieved within a rule-based monetary regime, not by relying on "independent" central banks and finance ministers to coordinate monetary policy to do it.
The long-term chart of the euro-dollar exchange rate shows a series of lower highs since 2007 (line c).
He is reported to have raised the question of the euro-dollar exchange rate with Mr Bush.
Gold prices surged starting March 15, as the Cypriot banking crisis was erupting, as the euro-dollar exchange rate broke down.
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"The current euro-dollar rate is more of a reason to be happy than concerned, " he said.
Only one bank, Goldman Sachs, expects the euro-dollar rate to rise above parity within the next 12 months.
Using the currency's 2007 peaks as a guide, the pound has fallen more sharply against the dollar and euro (around 25-30%) than it did after the exit from the Exchange Rate Mechanism in 1992.
The euro-U.S. dollar exchange rate slid 0.3% to 1.3118 while gold firmed 0.9% to 1, 714 per ounce.
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Inflation is under control, if a little above the target of 0-2%, and the euro is currently trading at about the same rate to the dollar as it was when he first ushered it into the world in 1999.
Mundell is proposing, in effect, a de facto super-regional currency area by managing the exchange rate between the dollar and the euro through a process of central bank coordination.
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Since the exchange rate is a binary issue, not distorted by an overhang of global liquidity, we take euro-dollar stability and falling gold as rejecting the idea of a Fed rate cut.
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