Corporate foreign exchange news

Published by Jamie JemmesonThe dollar is not under threat from a rallying euro because "fundamentally, the Eurozone is in worse shape than the US," one foreign exchange hedging strategist has claimed.Writing for FX360, Kathy Lien, director of currency research at GFT, explained that while the euro rallied against the dollar at the end of last week, it is likely to progress further and will have difficulty hanging on to those gains.She explained that in upcoming foreign exchange trading sessions, the euro is likely to come under pressure as Eurozone countries are forced to implement tough new measures to avoid falling foul of debt ratio rules.Under the Maastricht Treaty, the debt ratio of Eurozone countries must not exceed 60 per cent of gross domestic product, while budget deficits must not climb above three per cent.The US, meanwhile, is under no such obligation and will be able to adopt a more flexible currency management strategy thanks to this uncontested fiscal sovereignty, Ms Lien added.For more information on foreign exchange treasury services and risk management, visit our Corporate FX site