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Thursday, February 22, 2024

Euro to dollar parity. For the first time in 20 years

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For the first time in 20 years, the euro / dollar exchange rate briefly reached parity. That means one euro was worth one dollar.

As noted by the American television portal CNN, for a moment on Tuesday, one euro was worth one dollar. This means that the single European currency fell by as much as 12%. compared to the beginning of the year. “Concerns about a recession on the continent are widespread and fueled by high inflation and uncertainty over energy supplies,” writes CNN.

After 3 p.m. euro exchange rate against the dollar was 1.00455.

Euro Dollar at a historic level

European Unionwhich before the war imported about 40 percent. gas through Russian pipelines, it is trying to reduce its dependence on raw materials exported by Moscow. At the same time, Russia restricts gas supplies to some EU countries “- reminds the portal, including the suspension of supplies via Nord Stream 1.

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“Now this critical element of the European energy infrastructure has been shut down due to planned maintenance, which is expected to take 10 days. German officials, however, are concerned that it may not be turned on again,” the US portal describes.

“The energy crisis occurs at the time of economic slowdown. There are also doubts as to whether the European Central Bank will be able to tighten the monetary policy sufficiently in order to reduce inflation. The ECB announced that this month it would raise interest rates for the first time since 2011. According to the latest readings, inflation in the euro area is 8.6 percent “- we read.

The American portal also notes the disappointing data from the German economy. Last week, Germany recorded its first trade deficit since 1991.

“The Aggressive Cycle interest rate increases by central banks, including the Fed, in combination with slowing economic growth, will keep the pressure on the euro while directing investors towards the US dollar, which is seen as a safe haven, “analysts cited by CNN say.

According to George Saravelos, head of Deutsche Global’s currency market research department, a situation where the euro will fall below the dollar, around 0.95 – 0.97 “, can be achieved if both Europe and United States will find themselves in a deeper recession in the third quarter. “

The euro / dollar exchange rate is a question of the EU’s economic outlook

– What is happening in the euro / dollar pair is a reflection of the economic prospects of the EU – indicated the expert of Bank Pekao Piotr Bartkiewicz.

According to the economist, a further decline in the European currency should be expected in the near future as a result of a reduction in the competitiveness of the entire euro area.

– Europe lost cheap energy for several years, which is the result of positioning on a certain side of the conflict between Russia and Ukraine – he said.

Zloty exchange rate against major currencies

The zloty was also trading at record low levels on Tuesday; for the euro the price was PLN 4.8, and for the dollar – PLN 4.79. In Bartkiewicz’s opinion, the weakening of the zloty was caused by several unresolved problems, such as the receding prospect of a decline in inflation, the current account deficit and the fiscal deficit, as well as the recent “dovish signals from the NBP, which also translated into the valuation of the zloty against other currencies”

Asked about the prospects of the Polish currency, the analyst assessed that in order for the zloty to strengthen, we must see a peak in inflation, and moreover, a dovish turn of other central banks is needed. Bartkiewicz noted that the European Central Bank in July this year. is to raise interest rates for the first time and announced the second hike in September. The expert also indicated that further increases in the United States are also expected. – Then central banks should slow down with increases – he added. Bank Pekao analyst expects that at the end of the year the zloty / dollar exchange rate will be around 4.70, and the euro / dollar – below 1.00.

Main photo source: Shutterstock

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