The drachma in disguise?

25 May 2010 By Ian Campbell

Investors seem to think the single currency will go multiple as the world enters into crippling deflation. Maybe, but the zone has circled its wagons. The euro should survive, even if a periphery member departs. And the recovery in the U.S. and Asia remains in place.

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Global stock markets and the euro extended their slide on May 25, with the MSCI world index dropping to its lowest since early September 2009. The UK's FTSE 100 fell by 2.6 percent to an eightmonth low. In morning U.S. trade, the Dow Jones was down by 2 percent.

The euro dropped to a fouryear low below $1.22 and has fallen by close to a fifth from levels in excess of $1.50 in December and January.

The European Union's statistics office reported that industrial new orders in the 16 countries using the euro rose by 5.2 percent monthonmonth in March from February and by 19.8 percent on March 2009. The monthly rise was the highest since June 2007 and the annual increase the strongest in a decade.

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