Cheap Euro Not Good News for Bulgarian Consumers

The euro has marked a steady drop against the dollar sparking fears about its future and the state of European economies.

The long-standing trend of depreciation of the euro against the American dollar will raise consumer prices and inflation in Bulgaria, according to experts quoted by the Bulgarian News Agency (BTA).

The dollar is the principal currency of Bulgarian import and the prices of many goods depend on the dollar-euro exchange rate, stated Industry Watch analyst Krassen Yotov.

On the other hand a cheap euro is good for Bulgarian export, since it makes goods produced in the country cheaper and thus more competitive. In the first months of 2010 there was a rise in Bulgarian export to South-East Asia, which has had a positive effect on producers.

In the future there might be a temporary rise in the price of the euro, but the overall trend of depreciation will not cease, according to Bulgarian expert Dimo Dimov. He views the extremely negative comments about the situation of the common European currency that we witnessed in the past few weeks as a sign for an imminent temporary rise. But he thinks that the overall trend of depreciation is too strong to be reversed in the near future.

On the other hand there are no reasons to believe that the euro will reach parity with the dollar, according to Krassen Yotov. He expects the euro to keep levels close to the present ones with an additional slight rise of the dollar.

Bulgarians willing to speculate exchanging euros into dollars in view of a future rise of the latter might not gain much, according to the analysts. Savings in euros and Bulgarian levs are safer, they said.

The experts also mark a persistent instability and uncertainty of financial markets.

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