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A weakened euro, at its lowest level since July 2012, touched parity with the dollar on Tuesday, July 12, but later managed to recover to close slightly above the US currency.
Whoever had a euro in his pocket at the end of the first decade of the 2000s could say at that time that he had the equivalent of little more than a dollar and a half. Today, with the same euro, that person would not be able to buy more than a dollar.
It is what is known in economics as an exchange rate of 1 to 1, very close to being achieved between the most powerful currencies in the world, which this Tuesday, July 12, closed with a gap that does not even reach a cent in favor of the euro. The currency shared by 19 countries has depreciated by more than 12% since the beginning of this year.
After having reached parity at some point during the day, the euro recovered its position and closed on Tuesday still above the dollar. The US currency today costs 1.00540 euros.
What factors have strengthened the dollar?
The fear of a recession has made the dollar consolidate as one of the safest assets -if not the safest-, since it is considered highly resilient in the face of economic crises.
The recent interest rate hikes by the Federal Reserve (Fed) that have strengthened the dollar and the energy concerns fueled by the war in Ukraine, which weigh more and more on the Eurozone, are fertile ground to reduce the gap between these two currencies. .
The euro, moreover, has remained under strong pressure from a possible energy supply shortage in the region and uncertainty about the rate hike campaign launched by the European Central Bank.
Although the euro’s weakness has largely been the dollar’s boost, the currency has also been supported by growth concerns elsewhere such as China, which is implementing strict zero-Covid policies to contain further outbreaks.
With Reuters and EFE
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