FRANKFURT (dpa-AFX) – The euro continues its descent of the past few months at a fast pace. The common currency fell to its lowest level in almost 20 years against the US dollar on Tuesday. At its lowest point, a euro cost 1.0248 dollars, the lowest it was at the end of 2002. The European Central Bank set the reference rate at 1.0290 (Monday: 1.0455) dollars. The dollar thus cost 0.9718 (0.9565) euros.
The mood on the international financial markets, at times very gloomy, has been weighing on the euro for some time now. In contrast to the euro, the dollar benefits because many investors value it not only as a safe form of investment, but also as a very liquid form of investment due to the size of the US financial market. On Tuesday, therefore, not only the euro lost almost two US cents in value. Many other currencies also fell significantly against the greenback.
A central argument for the weak euro is that Europe is much more affected by the consequences of the Russian war against Ukraine than the USA. The main reason is the high dependency of many European countries on Russian raw materials such as crude oil or natural gas. On Tuesday, European natural gas prices rose to a four-month high on fears of increasing shortages.
Another reason for the weakness of the euro is that many central banks are reacting much more decisively to the high inflation than the ECB. While the US Federal Reserve has raised its key interest rate several times and significantly, the ECB has only been able to make an announcement so far. In mid-July, their key interest rate is expected to rise for the first time in eleven years, but probably only by 0.25 percentage points. Other central banks, such as Australia’s actually rather cautious central bank recently, are raising their interest rates much more sharply.
For other important currencies, the ECB set the reference rates for one euro at 0.85845 (0.85960) British pounds, 139.77 (141.51) Japanese yen and 0.9932 (1.0037) Swiss francs. The troy ounce Gold was trading at $1772 in London this afternoon. That was $35 less than the day before./bgf/jha/