Implications of the dollar price on the euro | Finance | Economie

For the first time in history, The dollar outperformed the euro. On Friday, July 8, the US currency was priced at 0.98 euro cent.

(Read: The dollar overtakes the euro for the first time in history.)

The possibility of a gas shortage in the Eurozone is driving traders away from the Eurozone currency. To avoid a blow to economic activity, the European Central Bank is, for the time being, reluctant to raise interest rates too quickly, Despite inflation.

According to Jason Balaguera, analyst at Values ​​AAA, this uncertainty in the eurozone has caused the euro to lose its value against the dollar. Moreover, there will be a direct impact in this part of the world. Specifically for those who have savings or commitments in euros, Because the purchasing power of those with income in that currency will decrease, the analyst explains.

Now, for Juan Eduardo Nets, Senior Foreign Exchange Associate at Credicorp Capital, there will be a positive impact for the Euro, especially Investors. “In times of currency weakness, it is more attractive to buy and invest in the cheaper region. If investors start from the US dollar, it is better for them to buy in the eurozone than in the US countries..so it is beneficial for the economic activity in the eurozone.”

Nets explains that this situation will affect the Colombian peso if the fall is independent. That is, only if the euro goes down. If the dollar remains stable, it will be so beneficial for the country that it will be cheaper to buy the euro or Invest in Europe.

However, to buy euros in Colombia, you have to mediate through dollars, according to Nets. In the face of the weakening of the Colombian peso against the dollar, it is difficult to obtain the euro.

However, the pound sterling, the official currency of the United Kingdom, also outperforms the dollar. For the Nets, this situation is beneficial for the US dollar as long as expectations of higher interest rates are more robust on the one hand US Federal Reserve (FED) from other central banks.

Although there was a significant increase in prices in the UK allowing it to stay strong in the market, there has been political turmoil in recent days that has had a direct impact on its rally. NETS refers to the resignations of key secretaries of government and Prime Minister Boris Johnson.

He notes that “this generates uncertainty that is punished by the currency.”

(Also: Dollar: What historical highs are due and what’s coming for the currency).

However, both experts agree that the depreciation of some currencies is also subject to their own interest rate policies.

They explained that “the yen, the Australian dollar, the Swiss franc and other currencies independent of the euro are witnessing a significant depreciation of the currency due to the price difference.”

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