Bad luck for America's pioneers: a dollar now costs you one euro

Bad luck for America’s pioneers: a dollar now costs you one euro

The last time the euro was equal to the dollar was at the end of 2002. This phenomenon is also called parity, when two coins are equal in value.

The European currency has been under pressure for some time due to the rising risks of economic catastrophe in the Eurozone, He writes for Bloomberg News† Investors fear that the European Central Bank (ECB) will be more cautious about raising interest rates in the Eurozone.

raise interest rates

The European Central Bank indicated that it will raise interest rates by 0.25 percentage points later this month to combat high inflation. This is a small step compared to the measures taken by the US central bank. This also causes the dollar exchange rate to rise.

In the United States, interest rates are rising at a much faster rate than in Europe. In mid-June, the Federal Reserve raised interest rates by 0.75 percentage points. Since US Treasuries offer higher returns to investors thanks to higher interest rates, dollars are in high demand so that you can buy them. This pushes the US currency exchange rate higher, which leads to this development.

A strong dollar is bad news for vacationers heading to the US. At the beginning of this year, you had to exchange 90 euros for a pair of jeans of a certain American brand at $100, and now you’ve lost 100 euros.

For Americans, it has become cheaper to buy euros for a vacation in Europe.

Suitable for export

It is also good news for companies that do a lot of business with the United States. Americans who want to buy European things actually have to pay less dollars. This is likely to lead to higher demand. And when the dollars received are exchanged, the entrepreneur gets more euros in return than in the last twenty years.

See also  Column: "Left" parties take big risks | Financial

Leave a Reply

Your email address will not be published.