The course of the euro continues to fall: on Wednesday afternoon, a euro temporarily cost only 1.0584 dollars – and the trend is falling.
This also marks the lowest level since April 2017, almost exactly five years ago.
At that time, the price fell to $ 1.0340, which is only 2.5 cents from the current mark.
A low euro exchange rate has many effects, both positive and negative.
Many companies will be happy about a cheap euro, and the export-strong German economy in particular benefits from it: a weak euro makes companies' exports cheaper.
Concretely, the products become more competitive in the world market.
It is the other way around with imports: companies that buy goods and raw materials then usually have to pay more.
Vacationers who want to travel outside the euro zone are also affected:
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There are many reasons for the weakness.
The Ukraine war is the most obvious.
According to many experts, Europe is more affected by it than the United States.
But the interest rate differential between the United States and the euro area is also widening.
While the US Federal Reserve (Fed) had already raised its key interest rate by 0.25 percentage points in March, the ECB has so far hesitated.
It only promised to end its bond purchases in the third quarter, i.e. the months July to September, and to take the first interest rate hike "some time later".
However, voices from the central bank, including its Governing Board, have recently increased, and they believe that an initial interest rate hike in July is possible.
The investment bank Goldman Sachs has therefore revised its forecast for further interest rate developments in Europe upwards: It now expects the ECB to raise its key interest rates by 0.25 percent in July, followed by further interest rate hikes in September and December and four further steps in 2023. In addition, the Goldman Sachs economists expect that the ECB will probably decide in June whether to end its bond purchase program at the end of the second quarter.
The economists attribute this forecast to, among other things, better than expected growth development in the euro area, continued strong inflationary pressure and recent statements by the ECB on high inflation expectations.
Historic strength of the dollar
The Fed's tightening monetary policy means the dollar is strengthening against many currencies.
The dollar index, which tracks the value of America's currencies against major currencies, hit 102.58 points on Wednesday.
On the one hand, this is the highest level since the Corona crisis, which briefly strengthened the dollar and caused the index to rise to 102.8 points.
However, there is not much left to reach the 20-year high of 103.3 points reached in 2016.
The dollar is already historically strong: the average value for the dollar index since 1972 is 96.39 points.
In the long term, the dollar has been appreciating since the financial crisis and thus for almost 14 years to the day.
At that time, in April 2008, the dollar index was still at 71.3 points.
A strong dollar is not necessarily good news for the global economy, as many countries – especially emerging markets – service their loans in dollars.
That makes servicing the loans more expensive, and the same also applies to American companies.
In addition, a high dollar rate is always considered a sign of many troubles in the world.
Other currencies also depreciate
The euro course also shows historical brands.
The long-term trend of the euro currency(ies) since 1985 has been broken, according to the currency specialist Oanda.
The dollar index and the euro course necessarily show a similar development, since the dollar index weights the common currency at almost 58 percent.
The Japanese yen accounts for almost 14 percent, although it has recently depreciated even more strongly against the dollar.
The pound sterling, which is weighted at just under 12 percent, was only marginally stronger than the euro.
The Federal Reserve's trade weight index has also shown strength recently.
Although this is still a long way from its peak from the Corona crisis, it is not from the highs of 2016 and 2002. If these marks are overcome, the dollar could build on the strength that the American currency had between 1980 and 2002.