For the first time in two decades, the euro is worth exactly one US dollar again. On Tuesday, the EU’s single currency fell to exactly one dollar, falling to “parity” for the first time since 2002. This means a one-to-one exchange ratio.
The euro has been under pressure in the financial markets for some time now. The causes are the consequences of the war in Ukraine and the relatively cautious battle of the European Central Bank (ECB) against high inflation.
Dollar boosted by Fed rate hikes
Incidentally, the US currency was able to gain ground against almost all other major currencies on Tuesday morning. Investors are already looking at the US inflation figures expected on Wednesday. A further rise in inflation and an inflation rate of 8.8 percent is expected for June. Due to inflation, the US Federal Reserve is likely to continue its tightening policy and raise interest rates significantly, which will give the dollar a boost.
Vicious circle: weak euro causes energy prices to rise further
The euro’s weakness, on the other hand, is extremely inconvenient in the current high inflationary environment. Goods imported into the eurozone become more expensive, which in turn fuels inflation. If the euro exchange rate falls, consumers will have to dig even deeper into their livelihoods. Energy and raw material prices, in particular, threaten to rise further.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
