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For the first time in almost two decades, the value of the euro equaled that of the US dollar; such a thing had not happened since 2002, when the common European currency was still in its infancy.
But at noon today, in the currency exchange markets, one euro was exchanged for one dollar. The reasons for its weakening include the war in Ukraine that has fueled fears of an energy supply bottleneck and recession, but also US interest rates that rose sharply, pushing investors towards the dollar and away from the euro. This is considered good news for Americans who will travel to Europe this summer.
Sara Rathner, travel expert at NerdWallet: If a year ago, an American bought 15 euros for a sandwich in Paris and it cost him about $17.80, today it costs him almost $15.10. It’s like getting a 15% discount. It’s kinder on people’s pockets and their travel budgets.
The Euro has been under pressure in the financial markets due to the measures taken by the European Central Bank to fight inflation. “The fear of the review is growing” in Europe due to the conflict in Ukraine, said experts from Commerzbank, and the main cause is believed to be gas supplies from Russia.
At the same time, the ECB has been slower than other central banks to provide stimulus measures and raise interest rates in order to fight inflation. The lower the euro exchange rate, the stronger other currencies, such as the dollar, will become. As a result, imported goods in European countries become more expensive, which incites more inflation.
However, some German experts said they could in theory benefit from the euro’s weakening, as their goods become relatively cheaper for foreign consumers.
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