Euro-dollar parity – For the first time since 2002: the euro is only worth one US dollar – News

  • For the first time in almost twenty years, the euro is only worth one US dollar.
  • Before midday on Tuesday, the two currencies reached parity for the first time since 2002.
  • According to economists, the reason for the weakening of the euro is the effects of the Ukraine war and the fight against inflation.

For a short time, the euro fell just below the one dollar mark to 0.9999. However, this is not the lowest level in the history of the euro: after its introduction as book money in 1999, it was recorded in October 2000 at 0.82685 dollars.

The euro has been under pressure on the financial markets for a long time. Since the beginning of the year, it has now fallen by around 13 US cents. Economists cite the effects of the Ukraine war, which hit Europe particularly hard, as one of the reasons. The high dependency on Russian gas supplies is particularly problematic. A gas supply freeze could trigger a severe recession, economists warn.

The euro is also descending against the franc


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The euro has been around parity against the franc for some time now. This means a one-to-one exchange ratio. On Tuesday, the parity of 0.98355 even marked the lowest price since the minimum price was lifted.

The SNB held out the prospect of interventions in favor of the franc should it become too weak against the euro. The Swiss National Bank had caught the markets on the wrong foot. The euro then continued its descent against the franc and dipped below par for the first time since January 2015, when the SNB had lifted the minimum euro exchange rate of CHF 1.20.

A second reason for the weak euro is the European Central Bank’s (ECB) rather cautious approach to combating high inflation. In contrast to many other central banks, the ECB has not yet raised its key interest rates, but only made an announcement. On July 21, interest rates in the euro zone are expected to rise for the first time in around eleven years.

In the fight against high inflation, the US Federal Reserve recently raised key interest rates by 0.75 percentage points and is likely to raise them by a further 50 to 75 basis points on July 27th. The Swiss National Bank (SNB) unexpectedly increased interest rates by 50 basis points.

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