Europe is facing a seismic shift, and (the) euro needs to fall to reflect that.’’Ī European slowdown could eventually give the European Central Bank less leeway to raise rates and moderate economic growth to address its own inflation problem. “It undercuts Germany’s growth model that’s based on cheap Russian energy. “This war is a ‘body-blow’ to Europe,’’ Robin Brooks, chief economist at the institute of International Finance banking trade group, tweeted this week. (European leaders have denounced Moscow’s move as an effort to blackmail Europe for backing Ukraine and embracing Western sanctions in the aftermath of Russia’s invasion.)Įconomists at Berenberg bank have calculated that at current rates of consumption the added gas bill would be 220 billion euros ($224 billion) over 12 months, or a whopping 1.5% of annual economic output. In particular, Russia’s recent reduction in natural gas supplies has sent prices skyrocketing and raised fears of a total cutoff that could force governments to ration energy to industry to spare homes, schools and hospitals.

economy is on firmer footing compared to Europe.’’ This increased demand for dollar-denominated securities, in turn, boosts the dollar’s value.Īlso contributing to the currency’s appeal, notes Rubeela Farooqi of High Frequency Economics, is that despite concern about a potential recession in the United States, “the U.S. Treasurys to rise, which attracts investors seeking richer yields than they can get elsewhere in the world. The Fed’s rate hikes cause yields on U.S. The dollar is climbing mainly because the Federal Reserve is raising interest rates more aggressively than central banks in other countries are in its effort to cool the hottest U.S. Dollar Index, which measures the value of American money against six major foreign currencies, has jumped nearly 12% this year to a two-decade high.

A strengthened dollar also delivers bargains to American tourists sightseeing in Europe, from Amsterdam to Athens. Yet there’s a positive side for Americans, too: A stronger buck provides modest relief from runaway inflation because the vast array of goods that are imported to the U.S.-from cars and computers to toys and medical equipment-become less expensive.

20 euro cents to usd