For the first time in nearly two decades, one U.S. dollar now equals to one euro. For over 20 years, the Euro has been superior to the dollar. However, on July 12, the two currencies reached a draw.
As at Tuesday July 12, 1 EUR equals 1 USD. This means that European firms and consumers will pay more for the goods and services that they import. On the other hand, European exports will be immediately cheaper in the international markets.
The euro has dramatically lost value since February when it was valued at over $1.13. This is happening while EU is experiencing inflation triggered by Russia’s attack on Ukraine.
In the past, the euro hit price parity with the dollar in December 1999. That was just less than a year after it traded for $1.17. This parity was due to the 2001 dot-com crash. For many years the dollar remained stronger than the euro.
At that time investors treated the USD as a safe-haven asset to hold during the tech bubble burst. Starting from 2003, the euro has remained stronger than the USD.
The parity of the two currencies is a signal that the looming economic crisis will affect Europe in a serious way.
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