The dollar has taken a headwind against the euro this year. However, in recent weeks, that has changed. For example, the European currency is again pegged to the greenback. But according to economist Eric Dore, director of economic studies at the IESEG School of Management, it will take some time for the euro to catch up with the dollar.
Why is this important?A weak euro against the dollar helps our exports. But it also has many drawbacks. Consider, for example, the impact of a strong greenback on inflation outside the US. Many major commodities, including oil and gold, are priced in dollars. If Europe and many developing countries want to buy these products, they have to put more money on the table.
In the message: The euro began a recovery movement.
- The dollar has already fallen 4 percent this month against a basket of six other currencies, including the euro. Lower-than-expected inflation pushed the greenback lower.
- Admittedly, it will be some time before the euro beats the dollar again. Let us not forget that in the last 24 months the Euro has fallen from USD 1.24 to USD 0.96 in September. That is a decrease of more than 10 percent.
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