ECB signals interest rate hold: A golden opportunity for the euro as a global reserve currency?

BasssssssssssssssssaaaaaaaBassssssssssssssssBassssssssssssssssBassssssssssssssssBassssssssssssssssBassssssssssssssssBassssssssssssssss

Sep 25, 2025

3 min read

327

Situation Overview: Different Positions of Two Central Banks

The latest stance from the European Central Bank (ECB) is sending a clear divergence from the policy direction of the US Federal Reserve (Fed), which could have a significant impact on the global currency balance.According to the latest reportsECB Vice President Luis de Guindos expressed confidence in the Eurozone's economic stability, stating that inflation risks are balanced and alleviating concerns about future low inflation. This stance follows the ECB's decision to temporarily pause monetary policy easing, contrary to market expectations that the Fed might consider an interest rate cut in the near future. This policy divergence has become a key factor in the euro's appreciation against the US dollar and sparked debate about the euro's role as a global reserve currency.

Behind the decision: Confidence in the stability of the Eurozone economy

The ECB's signal was not unexpected, but based on strong analysis of internal economic data. Mr. de Guindos dismissed concerns about a return to the low inflation era, pointing out that the ECB is sustainably approaching its 2% inflation target. *** *"The risk of falling short of the target is very limited in my view. Our assessment is that the risks to inflation are balanced."* *** The main supporting factors are the continued tightening of the labor market and expected 3% wage growth, which should support inflationary pressures in the medium term. Mr. de Guindos's remarks reflect that financial markets have interpreted and adjusted their expectations in line with the ECB, anticipating only one more interest rate cut by the end of the year.

The fallout: A stronger euro and new challenges

The most obvious result of this policy divergence is the euro's continued appreciation against the US dollar in recent months. This situation presents two-pronged implications that need careful consideration. On the positive side, the euro's stability and strength amid US monetary policy uncertainty reinforces its position as a safe haven and an increasingly attractive alternative reserve currency for central banks around the world. On the other hand, however, a stronger euro poses challenges for the Eurozone's export sector, as prices for goods rise in the eyes of international buyers. Mr. de Guindos alleviated this concern, stating that the current exchange rate does not pose a serious obstacle. *** *"I think at $1.15, the euro exchange rate will not pose a significant obstacle."* *** This statement indicates that the ECB assesses that the benefits of economic stability and inflation control outweigh the short-term negative impact on exports.

Strategic perspectives for investors and businesses

For retail and institutional investors, the euro's appreciation against the US dollar presents opportunities for investing in currency markets. At the same time, euro-denominated assets appreciate in value when converted back to US dollars, a factor that must be considered when allocating international investment portfolios. In the business sector, exporters in the Eurozone need to plan for higher costs associated with currency appreciation, potentially including hedging foreign exchange risk. On the other hand, importers benefit from lower costs. During volatile currency markets, it is important to monitor information and choose reliable financial services. Investors should carefully review the information provided by their broker or investment platform to ensure it aligns with their goals and risk tolerance. This ECB decision not only impacts the Eurozone but also signals a shift in the global financial landscape, where the euro may play an increasingly important role in the future.

Sources

https://th.investing.com/news/economy-news/article-93CH-388791

Written by

BasssssssssssssssssaaaaaaaBassssssssssssssssBassssssssssssssssBassssssssssssssssBassssssssssssssssBassssssssssssssssBassssssssssssssss

32131222

Tags:

Is this article helpful for you?

Best pick of the Week

Tag all languages

Highlight articles position 1

Tips for Writing an Effective Review Tips for Writing an Effective Review Tips for Writing an Effective Review Tips for Writing an Effective Review Tips for Writing an Effective Review Tips for Writing an Effective Review

TrustScore; The most trusted quality for financial companies. TrustFinance hosts reviews to help financial companies with confidence and deliver the deepest insights

รักแมวเป้าที่สุดในโลกรักแมวเป้าที่สุดในโลกรักแมวเป้าที่สุดในโลกรักแมวเป้าที่สุดในโลกรักแมวเป้าที่สุดในโลกรักแมวเป้าที่สุดในโลกรักแมวเป้าที่สุดในโลกรักแมวเป้าที่สุดในโลกรักแมวเป้าที่สุดในโลกรักแมวเป้าที่สุดในโลกรักแมวเป้าที่สุดในโลกรักแมวเป้าที่สุดในโลกรัก

Best pick of the Week

Tag all languages

Highlight articles position 1

TrustScore; The most trusted quality for financial companies. TrustFinance hosts reviews to help financial companies with confidence and deliver the deepest insights

14 Oct 2025

testttststtestttststtestttststtestttststtestttststtestttststtestttststtestttststtestttststtestttststtestttststtestttststtestttststtestttststtestttststtestttststtestttststtestttststtestttststtestttststtestttststtestttstst

22 Sep 2025

Oracle's AI-Driven Cloud Growth Fuels BofA Price Target Hike Amid Increased Spending

11 Feb 2025

Your Ultimate Guide to Traveling in Phuket, Thailand

03 Feb 2025

For car For car For car For car For car For car For car For car For car For car For car For car

16 Jan 2025

Essential Day Trading and Stock Market Strategies for Beginners

15 Jan 2025

TrustScore; The most trusted quality for financial companies. TrustFinance hosts reviews to help financial companies with confidence and deliver the deepest insights

15 Jan 2025

Essential Guide to Stock Trading for Beginners

15 Jan 2025

Traveling from Tokyo to Osaka: A Complete Guide