Euro hits lowest level in 20 years against US dollar
The euro dropped to the lowest level in 20 years against the U.S. dollar on Friday. Experts say this depreciation of the euro, which has been dropping in value for some time, could have several outcomes for the Netherlands, according to De Telegraaf.
Currently, 1 euro equals 0.97 U.S. dollars. In contrast, 1 euro was worth 1.60 dollars in 2008. The depreciation is due in part to a downturn in the eurozone's business activity, according to Reuters. The energy crisis caused by Russia's invasion of Ukraine –– and the resulting inflation –– are having a stronger effect on Europe than the U.S., which does not import Russian gas.
The lower euro could actually benefit countries that export significant amounts of goods to the U.S., according to De Telegraaf. This is because these exports can be more easily purchased by Americans. However, around 70 percent of the Netherlands' exports are within the European Union, international economic relations professor Harry Garretsen told De Telegraaf.
Meanwhile, raw materials and energy such as barrels of oil are traded in dollars, meaning they will become even more expensive within the eurozone. And importing other goods from the U.S. will also become more pricey.
Differing interest rate policies also played a role in the disparity between the dollar and euro, De Telegraaf columnist and economist Edin Mujagić told the paper. The European Central Bank has been more hesitant than the U.S. Federal Reserve to raise interest rates. "The dollar then becomes more interesting because you get more interest."
