We all have observed that the euro exchange rate has been calling for months now as it is parallel with the US dollar.
A year ago, one euro cost $1.20, and by the beginning of 2022, it had already plunged to $1.13. Since then, the depreciation has continued, and now the euro is parity with the dollar.
The experts suggest that the reason for the downfall of the Euro is Moscow's invasion of Kyiv, the war has triggered a sense of fear over Europe's energy, and this has hit the economy as the euro has been pushed to a 12% lower rate than the US dollar so far.
The inflation in the European area averaged 8.6 percent on June 14, and smaller European economies are experiencing high rates of inflation, up to as high as 22% in Estonia. Currently, only five European area economies are below this European average.
While the US economy has been affected less by the Ukraine war than the European area, Washington has thus far remained "somewhat immune to the rising prices of oil and natural gas supply."
Even at the end of January, the US Federal Reserve Bank announced to initiation of a series of consistent and significant interest rate hikes that have helped the US dollar gain some strength. In contrast, the euro has lost 10 percent of its value.
The European Central Bank is likely to raise its interest rate by 0.25% this month; the FED raised its benchmark interest by 0.75 in June, making it a considerable increase in interest rate in the last thirty years.