Bonds, stocks get ECB boost; euro unfazed

THE big question is whether European Central Bank (ECB) chief Mario Draghi's monetary bullets will be a shot in the arm for the sclerotic eurozone economies.

Negative interest rates and a 400 billion euro (S$684 billion) cheap central bank facility aimed at boosting business lending lifted equity and bond prices slightly, but the shotgun fired blanks at the euro.

After falling to a five-month low of 1.35 against the US dollar, the euro rebounded to around 1.365 on the back of short-covering from hedge funds, which had built a substantial bear position against the currency.

Regardless of short-term market reactions, however, the ECB regards the current foreign exchange rate as uncomfortably high. In central bank-couched language, ECB officials hinted broadly that a devaluation of up to 10 per cent would boost exports and reduce imports of low-priced goods, which are causing disinflation and the …