BNP Paribas SA revised its third-quarter 2011 euro forecast against the dollar to 97 U.S. cents from $1.07.
“We are convinced that euro-dollar will have to remain weaker for longer,” currency strategists led by London-based Hans-Guenter Redeker, wrote in a research report today. “A weak euro will help Europe generate the required income to deal with the financial consequences of the crisis. Moreover, the ECB will have to keep interest rates low to deal with the deflationary consequences of closing the inner EMU competitive gap.”
The euro traded 0.4 percent higher at $1.2357 as of 4:11 p.m. in London. It will reach $1 in the first quarter of 2011, BNP said, repeating an earlier forecast.