The dollar has been riding the wind against the euro this year. But a change has occurred in recent weeks. For example, the European currency is again above the level of the dollar. But according to economist Eric Dorr, director of economic studies at the IESEG School of Management, it will be some time before the euro overtakes the dollar.
Why is this important?Weak euro against the dollar helps our exports. But it also has several disadvantages. Consider, for example, the effect of a stronger dollar on inflation outside the United States. Many commodities, including oil and gold, are priced in dollars. So Europe and many developing countries have to put more money on the table if they want to buy these products.
In the news: The Euro started to recover.
- The dollar has already fallen by 4 percent this month against a basket of six other currencies, including the euro. Less-than-expected inflation pushed the dollar lower.
- Admittedly, it will be some time before the euro once again outperforms the dollar. We must not forget that the Euro has fallen over the past 24 months from $1.24 to $0.96 in September. This is a decrease of more than 10 percent.
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