For the first time in two decades, the United States dollar has equaled the Euro with hopes of the dollar topping the euro in the coming weeks on the foreign currency charts.
According to Bloomberg, the two currencies reached parity on Wednesday morning after the euro suddenly lost value following release of worrisome inflation data.
The euro has suffered some blows in recent times due to growing economic recession fears and fall outs from Russia’s war with Ukraine war affecting the economy.
The euro in recent times has been losing value against the dollar since the start of the year. It hovered around $1.13, well off its peak of nearly $1.60 in 2008.
Live currency data reported by Market Watch shows the euro slipping just a few hundredths of a cent above the dollar, while Bloomberg and Reuters reported that the euro briefly slipped below a dollar in value.
Analysts say the sinking value of the euro reflects growing risk aversion on the part of investors, who are pouring into dollars ― considered a “safe haven” asset compared with other currencies ― amid concerns about inflation, the war in Ukraine, and recession fears in numerous countries.
Now analysts are watching to see whether the euro will sink below the dollar, something that hasn’t happened since 2002, when the Euro fell to $0.99, just three years after the currency was created.
“Going to Europe looks a lot cheaper to Americans compared to last summer,” Moody’s Analytics chief economist Mark Zandi told USA on Tuesday, noting a stronger dollar can offset the cost of rising airfare by 10% to 20%.
With the two currencies roughly even, McBride said it could be a “headwind for multinational companies,” who can now expect a greater return when they convert euros to dollars.
