The euro rose to the highest level since April 2022 against the US dollar on Monday.
The single currency, which was still worth less than the dollar for some time last year, is on the rise amid expectations that interest rates in the eurozone will increase in significant steps.
The euro rose above $1.09 on Monday morning. Several European Central Bank (ECB) leaders, including President Christine Lagarde and Governing Council member Claes Nott, have indicated in recent days that interest rates will be raised further in the coming months to curb soaring inflation.
This is stated by Klas Nott, President of De Nederlandsche Bank (DNB), on the TV programme WNL on Sunday The European Central Bank will also raise interest rates by half a percentage point both times at its February and March meetings. Even after March, interest rates will continue to rise, according to Knot.
By making borrowing more expensive, the ECB is trying to curb demand in the economy and this should curb inflation in the Eurozone.
The dollar is under pressure
Before the Russian invasion of Ukraine in February 2022, the Euro was still above $1.14 USD. After that, the value of the currency steadily declined. In July last year, the euro was worth less than the dollar for the first time in twenty years. This was mainly due to fears of recession in the Eurozone and rising interest rates in the United States, as the Federal Reserve started raising interest rates before the European Central Bank in 2022. As a result, the dollar became more attractive and its value increased. At the end of September, the euro bottomed at $0.95.
Meanwhile, fears of a severe recession in the eurozone receded and expectations at most predicted a moderate economic contraction. The US central bank is also expected to raise interest rates less sharply in the near future, putting pressure on the dollar.
“Travel enthusiast. Alcohol lover. Friendly entrepreneur. Coffeeaholic. Award-winning writer.”