The euro has had a sluggish start to the second half of 2022 as the fiat currency slid to a 20-year low against the USD. Economics
The drop adds to the fear that the global economy is in a recession and analysts believe that the risk of “parity is just a matter of time now.”Policymakers at the European Central Bank have been dealing with record inflation levels but have been much slower than the U.S. in terms of raising the benchmark interest rate.
“With hindsight, I think many governing council members would have liked to hike rates already in June,” Ducrozet explained. “But it’s a very difficult situation because you know that we are heading into a slowdown,” the Pictet executive added. Inflation and issues tied to the war in Ukraine have put the EU in a financial pickle with fewer choices on the table. The dreary European economy has also put significant pressure on the euro, the region’s sovereign fiat currency that’s leveraged in 19 economies. The euro tapped a 20-year low on July 5, 2022, hitting $1.0281 per euro, which is the lowest value against the U.S. dollar since December 2002.Bloomberg on Tuesday that parity with the U.S. dollar is “just a matter of time now.
With ECB sticking to its line that we will only see a 25bp hike in July – at a time when others are hiking much faster – and waiting for September to deliver a faster tightening, there is also little support coming from higher yields.In addition to the ECB dealing with inflation and issues connected to the war, the United Kingdom is suffering as well. The Bank of England has detailed in athat the U.K.’s economic outlook seems grim, and the central bank notes U.K.
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