Analysts at RBS Securities Japan Ltd. in Tokyo expect the single currency to lose 20% trading versus the greenback. The specialists claim that the attempts of European countries to cut sovereign debt will harm economic growth and trigger deflationary pressure.

According to RBS, as far as it’s possible to judge by interest rates and inflation differential euro is still expensive against US dollar and may remain so even after 20% depreciation.

European currency declined by 14% in 2010. The economists say that European economy may eventually benefit from euro’s decline. RBS forecasts that euro area’s economy will gain 1.2% in 2010 and 1.3% in 2011, while the US one is thought to grow by 3.4% and 4.3% respectively and Japan – by 3.2 % and 1.8%. In Europe Germany that accounts for one third of the currency union’s economy will be at the head of fighting the crisis.

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