Y 20 years after its birth, the euro reaches parity with the dollar, so they are equal. This situation, in the opinion of analysts, Fear of recession in EuropeA run circulating in the markets as a result of escalating inflation in Spain at 10.2% in June from almost four decades ago; and 8.6% in the euro area, a 20-year high.
But not only that, this is also the European Central Bank’s (ECB) intention to raise the price of money, which has been at 0% for ten years. It will do this by 0.25 points on July 21 and apply another 0.50 point increase in September if prices rise further.
After three increases in interest rates in the US, capital chose to cross the Atlantic because dollars yield more. The Federal Reserve put all the meat on the grill. But the difference is that there is monetary policy of increases in the price of money. cooling a rapidly rising demand. That’s what the manuals say. In Europe, it remains to be seen whether the rise in interest rates will serve to mitigate the effects of demand-driven price increases. And by wanting to curb inflation, at the risk of causing a collapse in demand and a recession.
$1 more expensive to buy or sell
One of the areas that will draw the most attention is the raw materials whose prices are given and paid in dollars. And this is at a time when oil and gas is going through the roof. In any case, it’s not an advantage for US companies as their products and services become more expensive for foreign buyers.
2 The poorest
Added to the depreciation caused by inflation is the dollar dependency. Depreciation against the dollar at other stages makes exports cheaper However, as in the current situation, in a situation where energy prices are rising rapidly, growth may decline and inflation in the euro area may be further suppressed.
3 Cheaper exports and more expensive imports
It will be more expensive to buy products and services in the US and other dollar-denominated countries than from a Spanish or Italian company or any country in the Eurozone. Instead of more attractive for buyers from third countries Buy goods and products from countries in the eurozone.
4 The most expensive tourism in the USA and the cheapest here
Traveling to the USA will not be as bargain as in other stages. It will be more expensive for Europeans to travel and buy from the world’s leading power. On the other hand, it will be more attractive for Americans to visit European countries because they will get more euros for their dollar and therefore have more purchasing power.
Source: Informacion
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