Reasons of the Euro declining
The US dollar remains the world’s dominant currency for trade and central bank reserves, with the euro falling to a 20-year low.
There are 19 European countries using the Euro as Europe grapples with energy supply and economic growth concerns, while the dollar rose against currencies.
The main, supported by inflows of the currency, which is considered a safe haven, the Euro reached 0.9909 dollars, the lowest level since late 2002, and recorded a decrease in the latest trading by 0.29% to 0.9914 dollars.
The British pound fell to a new low, the lowest in two and a half years, at $1.1729, while the Japanese yen settled at 137.270 per dollar, after touching a one-month low of 137.705 earlier.
The risk-sensitive Australian dollar fell to its lowest level in a month, and recorded in the latest trading, a decrease of 0.29% to $0.6859.
New Zealand’s dollar as well, fell 0.15% to $0.6163.
Amid pressures on energy supplies, European fears are growing that any disruption during the winter months may be devastating to business activity in light of the unstable state of energy supplies, as Europe is subject to Russia in its dependence on oil and natural gas more than the United States to maintain industry and generate electricity.
It is worth noting that the European currency reached an all-time high of $1.18 shortly after its launch on January 1, 1999, but then began a long slide, falling across the $1 mark in February 2000.
Energy prices drove Eurozone inflation to a record 8.9% in July, making everything from groceries to utility bills more expensive.
They have also raised concerns about the need for governments to ration natural gas in industries such as steel, glass making and agriculture if Russia scales back or shuts down its gas taps altogether.
Rapid interest rate hikes by the US Federal Reserve to combat inflation at 40-year highs As the Fed raises interest rates, interest rates on interest-bearing investments tend to rise as well. If the Fed raises interest rates more than the European Central Bank, the higher interest yields will attract investors’ money from the euro to dollar-denominated investments, these investors will have to sell the euro and buy dollars to buy those holdings, this causes the euro to fall and the dollar to rise.
And the strengthening of the dollar index, which measures its performance against a basket of major currencies, the heaviest of which is the euro, will increase investors’ appetite for the dollar as a safe haven, the risk of issuing the US Federal Reserve.
In revenue from those companies when they return those profits to the United States.
If the euro profits remain in Europe to cover the costs there, the exchange rate becomes less important.
