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Lagarde: 2012 will not be end of euro

06 January 2012, 13:52

South Africa - The euro is likely to survive 2012 despite the debt crisis in the euro currency zone, International Monetary Fund (IMF) MD Christine Lagarde said on Friday.

European leaders will hold another summit this month to try to resolve the crisis which threatens the survival of the single currency 10 years after it went into circulation.

“Will 2012 be the end of the euro currency? I seriously don’t think so. It's a young currency, it's a solid one as well,” Lagarde told journalists on a visit to South Africa.

“You have within the zone, not in relation to the currency, serious pressure and issues concerning the sovereign debt, concerning the strength of the banking system, which are being addressed. But the currency itself is not one that would vanish or disappear in 2012, not at all.”

Lagarde, in South Africa as part of her first tour of the continent since taking the IMF post, reiterated that the fund would likely revise downwards its 4% growth forecast for the world economy in 2012.

Emerging markets such as South Africa have borne the brunt of global risk aversion triggered by the eurozone crisis, with the rand falling nearly 23% against the dollar last year.

Finance Minister Pravin Gordhan said more action was needed globally to address currency volatility resulting from the eurozone crisis.

“Clearly the current weakness in the currency is beneficial for exporters but has the flip side effect of inflationary pressures which the Reserve Bank has to actually deal with,” he said.
Lagarde was due to meet Reserve Bank governor Gill Marcus later on Friday, and President Jacob Zuma on Saturday. 

- Fin24

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