Paul O Mahoney
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Agreed but what's you view on the effects now?It's down to the slowness of the ECB in raising interest rates compared to the dollar and other major currencies.
It's probably a mistake as they are exasperating inflation by allowing a depressed euro along with high oil prices.
Remember back in 2010 to 2012 when the euro was trading at $1.5 to the euro during the financial crash.
The ECB was way too slow in bringing in QE as almost broke up the euro, it was only with the timely intervention of Mario Draghi that saved the day. I think Christine Lagarde and Philip Lane are out of their depths in managing this crisis
But inflation has been higher in the US. Since 2002 inflation in the US has been 64% but in the euro area a quarter less at 48%. So the purchasing power of the dollar has fallen by more than the euro.The Euro has for the first time since December 2002 hit parity with the US $. The euro at that time was in our pockets for only 12 months and I remember many commentators at that time saying to expect the euro never to trade above $1 ever.
Thanks Paul , well it wasn't me it was the articles that I was reading were so convincing back then. Nobody could believe that with inflation not being an issue for 40years that it would come roaring back again.Btw Joe, you called the inflation increase during the pandemic many disagreed including myself, well
If the ECB raise the interest rate,will the euro strengthen against the dollar??Positives
Irish pensions have been cushioned from the 25%+ fall in US stock markets.
Americans think its very cheap when they holiday here - even at the high prices we see.
Negatives - almost all price related
Forget America as a holiday destination - Its ridiculously expensive
Fuel prices - oil and the refining margins are both in dollars as is coal. (40kg bag will be €35+ this winter)
Food prices - many raw materials are traded commodities and traded in dollars (wheat, soy, coffee, chocolate etc)
Electronics, Toys, Furniture, Homewares - huge amount made in China and priced in dollars, prices already noticeable increasing on China made electronics
Double negative - to stop the decline the ECB will have to raise interest rates far more aggressively. That will increase mortgage payments substantially for those with high mortgage borrowings.
It will need a combination of potential ceasefire in Ukraine and ECB telling the market that interest rates will rise more than they have intimatedIf the ECB raise the interest rate,will the euro strengthen against the dollar??
Well the West controls the monetary system because its basically a western system. China wanted to join it after the great opening up after Mao in 1970s, Russia after the fall of communism 1989.Another question I think not unrealated to the conversation above is what does the weaponisation of currency via the seizure of foreign USD reserves mean for the current monetary world order as we know it. I suspect the Ukraine conflict is only part of a massive power struggle between the east and west as to who should set the rules financially in the new world order. It would appear that China/Russia and friends have had enough of the USD as the global reserve currency and the US bossing them as the world's police about while surrounding them with missiles/warships etc.
Because the US is the most powerful country in the world, it has the biggest economy ,the most powerful military which is also important,Most of US products aren't produced in the country boundaries of the USA, while innovation can be created the manufacturing is in global factories.
Pfizers vaccines for Europe are produced in Europe, the vaccine pill here in Ireland and the technology was Biontechs, with Pfizer able to manufacture and ship.
Smartphones has multiple designs but Apple were first out to market and manufacturing in multiple factories.
The dollar is the currency used globally but why? The gold standard is long gone and would Wall Street still be the global leader in international finance?
I don't see it being dropped but I simply cannot understand why it's still the dominant currency.
Whilst arguably on the higher end of the scale, $40+ hasn't been unusual even the last few years.I’m just back from the US, no doubt but inflation is an issue & weak € makes it very expensive. We paid $50 for compulsory valet parking at one hotel, per night!
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