Thursday

29th Sep 2022

Euro heading for dollar parity

  • The euro is set to hit parity with the US dollar as its value continues to plunge. (Photo: Images_of_Money)

The euro is set to hit parity with the US dollar in the coming weeks as a combination of quantitative easing and fears over a Greek exit from the eurozone continues to fuel a plunge in its value.

The euro has lost 10 percent against the dollar and the pound sterling since January. This has largely been attributed to the European Central Bank’s recently launched €1.1 trillion quantitative easing (QE) programme, which will pump an extra €60 billion into the eurozone economy every month until September 2016, alongside renewed fears that Greece could be forced out of the single currency bloc.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

At the close of trading on Tuesday (10 March), one euro was worth $1.07 and £0.71 respectively, its lowest rate against the dollar since September 2003 and lowest level against the pound since 2007.

Market analysts expect the euro to slide further against the greenback because the ECB’s bond-buying programme is expected to be accompanied by the first interest rate rise in the US since the 2008-9 financial crisis.

The falling euro is also putting increasing pressure on Denmark to follow the lead set by Switzerland last month and abandon rules capping its kroner currency to the euro, as the kroner becomes too strong to maintain the link.

The euro lost nearly 20 percent of its value in a day against the Swiss franc after the Swiss national bank abandoned a three year cap on the franc's value against the single currency in mid-January.

The falling currency makes the eurozone’s exports more attractive - which should aid the bloc’s economic recovery - but makes it more expensive for people travelling outside the Eurozone.

Last week the ECB revised up its forecast for the bloc’s economic performance in 2015 to a 1.5 percent growth rate.

Greece

Meanwhile, Greece’s international creditors are to start “technical level” talks with government officials in Brussels on Wednesday after Eurogroup chairman Jeroen Dijsselbloem urged Greece to “stop wasting time” in implementing the country’s controversial bailout programme.

However, there has been no let-up in tough-talking by either side.

In a speech to the Greek parliament on Tuesday, prime minister Alexis Tsipras appeared to link the ongoing bailout talks to demands for Germany to pay reparations from its occupation of Greece during the Second World War.

He said the Greek government will strive to honour its commitments to the full”, but would also “strive to ensure all unfulfilled obligations toward Greece and the Greek people are fulfilled”.

“You cannot pick and choose on ethical issues,” he added.

Analysis

Investors in renewables face uncertainty due to EU profits cap

While a cap on revenues from renewables is aimed at redirecting excess profits from low-cost electricity generation back to consumers, analysts and industry groups argue such measures come with risks — and at a bad time.

News in Brief

  1. EU to ban Russian products worth €7bn a year more
  2. Denmark: CIA did not warn of Nord Stream attack
  3. Drone sightings in the North Sea 'occurred over months'
  4. Gazprom threatens to cut gas deliveries to Europe via Ukraine
  5. New compromise over EU energy emergency measures
  6. 15 states push for EU-wide gas price cap
  7. EU: Nord Stream explosions 'result of a deliberate act'
  8. EU okays €21bn Covid-recovery funding for Italy amid concern

Stakeholders' Highlights

  1. The European Association for Storage of EnergyRegister for the Energy Storage Global Conference, held in Brussels on 11-13 Oct.
  2. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos
  3. European Committee of the RegionsThe 20th edition of EURegionsWeek is ready to take off. Save your spot in Brussels.
  4. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  5. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  6. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries

Latest News

  1. Netherlands tops EU social safety net for the poor
  2. New EU rules to make companies liable for their AI failures
  3. Can King Charles III reset the broken Brexit relationship?
  4. Meloni's navy-blockade plan to stop Libya migrants 'unlikely'
  5. Underwater explosions were detected near Nord Stream leaks
  6. EU countries stall new pesticide rules, blame Ukraine war
  7. The UN's Uyghur report must push EU into China sanctions
  8. Russian diamonds ban 'would cost 10,000 jobs', Antwerp claims

Join EUobserver

Support quality EU news

Join us