For the first time in 20 years, the Euro’s value has equalised with the value of the US Dollar and this has caused fears of recession within the Eurozone
The Euro is down almost 12% this year.
It started 2022 strong, but the war in Ukraine started an inflation surge.
So what does this all mean?
It’s important to note that since the Euro was introduced in 1999 it has very rarely dropped below one US dollar in value.
After two decades, the Euro has secured itself as the second most sought after currency in terms of global reserves.
But other currencies like the Sterling and Yen have also lost value against the US dollar this year.
According to Reuters, “partly because of more aggressive U.S. rate hikes have boosted the dollar’s appeal and also as global recession fears have sent investors flocking to the safe-haven dollar”.
And even if the European Central Bank hikes rates, the US Federal Reserve will hike more.
And the lower your currencies value against the dollar the higher inflation.
But all in all economists are saying the ECB will be hiking rates aggressively to fight back.
And as the world recovers from the pandemic, the Euro-Dollar parity may have global repercussions.
