Posted on 03/06/2015 5:20:35 AM PST by SeekAndFind
LONDON (AP) — The euro could soon be doing something it's only done a couple of times in its 16-year existence — trading 1-to-1 with the dollar.
Europe's single currency has since May been on a downward trajectory against the dollar, mainly because of the divergence in economic performance between the eurozone and the United States. Where the eurozone's recovery from the global financial crisis has been at best anemic, the U.S. economy appears to be going from strength to strength.
And that divergence is hurting the euro's fortunes.
From $1.40 last spring, it is now trading below $1.10 for the first time in 12 years and market observers think parity with the dollar could be imminent. On currency exchanges along the Champs-Elysees in Paris, it's not far off, with one euro buying $1.039.
Beyond the symbolic value that two of the world's biggest reserve currencies are worth the same, the euro's decline is helping exporters in the 19 eurozone states and will make it less expensive for U.S. tourists to visit the old continent.
"The cheap euro makes Greece more attractive, and we have a very positive picture from the U.S.," said Andreas Andreadis, head of the Association of Greek Tourist Enterprises.
The currency movements are mainly driven by the actions of each economy's central banks. While the European Central Bank has slashed interest rates and launched a massive money-creating stimulus, effectively diluting the value of the euro, the U.S. Federal Reserve is doing the opposite — it's preparing to raise interest rates borrowing rates following its decision last year to bring an end to its own multi-year stimulus.
(Excerpt) Read more at utsandiego.com ...
OPEC Has Already Turned to the Euro
GoldMoney Alert
February 18, 2004
...The source for the euro exchange rate is the Federal Reserve, and I have calculated the euro's average exchange rate to the dollar for each year based on daily data.We can see from column (4) in the above table that in 2001, each barrel of imported crude oil cost $21.40 on average for that year. But by 2003 the average price of a barrel of crude oil had risen 26.0% to $26.97 per barrel. However, the important point is shown in column (6). Note that the price of crude oil in terms of euros is essentially unchanged throughout this 3-year period.
2001
As the dollar has fallen, the dollar price of crude oil has risen. But the euro price of crude oil remains essentially unchanged throughout this 3-year period. It does not seem logical that this result is pure coincidence. It is more likely the result of purposeful design, namely, that OPEC is mindful of the dollar's decline and increases the dollar price of its crude oil by an amount that offsets the loss in purchasing power OPEC's members would otherwise incur. In short, OPEC is protecting its purchasing power as the dollar declines.
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Rehab.
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