Eight days ago, the euro hit a record low against the US dollar when it touched $1.028 per unit against the USD last Tuesday. This week, the official currencies of the 19 member states of the European Union reached parity against the US dollar for the first time in 20 years.
Hits parity in Euro against US dollar, greenback appreciates against basket of fiat currencies
Although the goal of the European Union (EU) was to introduce a sovereign fiat currency to the EU in the sixties, the euro was not introduced until 1 January 1999. At first. , the euro was introduced virtually, and by 2002 banknotes and coinage began to circulate. Almost 24 years later, the euro is not performing well against the US greenback and the EU sovereign currency reached parity with the US dollar on Tuesday, July 12.
The EU has suffered from significant inflation due to the loose monetary policy that occurred in the context of the Covid-19 pandemic and the Ukraine-Russia war. Before the war, the EU managed 40% of EU gas from Russian exporters. The US dollar has seen significant demand in recent times as fiat currencies skyrocketed to Highest in 20 years against a basket of fiat currencies on Wednesday.
Last week, Germany printed first goods trade deficit in three decades. It is hard for analysts to imagine that things in the euro area could improve in the near future. “Given the nature of German exports being price sensitive, it is still hard to imagine that the trade balance could improve significantly from here in the next few months as the euro area economy is expected to improve. will decelerate,” strategists from Saxo Bank said in July. twelfth.
In the past, the euro has been on par with the US dollar, as the fiat currency matched the dollar’s exchange rate in 2002, the same year euro-based banknotes and coins were issued. At the time of writing, the exchange rate of EUR against USD is $0.9998. While the euro fell this week, the US dollar index exploit $108.56, a value not seen since October 2002. Despite record inflation in the US, the US greenback remains extremely strong against most fiat currencies circulating on the platform. current global economy.
What do you think about the euro reaching parity with the US dollar this week? Let us know what you think about this topic in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons
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