Euro-dollar currency parity: what changes in travel and beyond
Euro and dollar have reached parity. The value of the two currencies is almost identical, taking into account the slight fluctuations [...]
United States of America
Euro and dollar have reached parity. The value of the two currencies is almost identical, taking into account the slight market fluctuations that change daily. What changes for European travelers? Beyond the large-scale consequences, such as the damage suffered by governments to purchase commodities, what will ordinary people have to get used to? Such a situation has not occurred since as far back as 2002. The euro has always been stronger, peaking in 2008 when it was worth as much as $1.60. Those who usually shop online have already realized the shift, but this summer will teach a lesson to all those who have opted for the U.S. for their vacations.
Euro-dollar what changes with currency parity
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We all know that the cost of living in the United States is far higher than in Europe. The exchange rate in favor of the euro used to allow European travelers to save something. Here, that margin is gone today.
Stop at McDonald's? If previously one could save a little more than 1 euro at the exchange rate, today the $7.99 to which the famous Big Mac is sold is equivalent to 7.99 euros and no longer the 6.70 of early 2021. Making the exchange before you leave to have some cash in your pocket, 98 to 102 dollars per 100 euros will be obtained, depending on market fluctuations, as mentioned. We would have had 160 in 2008 and 115 last year.
Euro-dollar exchange rate: who's smiling
If some tourists grimace in disapproval at seeing their U.S. vacation budgets increase slightly, there are also those who are smiling. Looking to Italy, the many companies engaged in exporting could see their orders increase, considering how the exchange rate is now in favor of the US. Made in Italy is an impressive $54 billion business, and in the medium term it could increase considerably.
Considering how our country imports significantly less from America, there are gains in the big picture (import from the U.S. is worth $23 billion)
Euro-dollar exchange rate: problems in the long run
While in the immediate term there are those who will have to get used to a slight cost shift for their travel or online purchases from America (many have bought iPhones, Playstations, and other tech items to save money over the years), in the long term the argument changes. Oil purchases are made in dollars, and having a currency parity hurts Europe. This situation could lead to a new rise in fuel prices, which are already skyrocketing. All of this obviously ties in with the war in Ukraine, which has spooked and upset the stock market. This mix of elements could lead, unfortunately, to a general increase in the cost of energy.
But does the United States really benefit from having a strong currency? Parity could be followed by a sharp overtaking of the dollar by the euro. Looking at such a scenario, the Wall Street Journal warns. It would be in the U.S. interest to lower the value of the currency again, avoiding export problems and limiting damage in allied countries.
