After almost twenty years, the US dollar-euro exchange rate was at parity yesterday for the first time, which means that the value of the euro has fallen by more than 12 per cent since the beginning of the year. Some experts do not rule out the possibility that the situation with the dollar rising and the euro falling in value will continue.
The Chairman of the Board of Governors of the National Bank of Serbia (NBS), Nebojša Savić, says that the fact remains that the American economy is in a better position than the European one, as it has recovered much faster in 2020 and 2021, which led to the strengthening of the dollar.
Another reason for this is the war in Ukraine, because the eurozone has a bigger problem with maintaining economic activity than in America, which means that ‘the American economy has greater self-sufficiency in energy resources and the ability to maintain production, while Europe has a problem with energy resources, which has reflected in the weaker euro against the dollar’.
Economist Ivan Nikolić says that the dollar-euro parity has occurred due to the stable rise of the dollar since January 2021 and that the higher interest rate, which is 1.75 per cent in America, while still zero in Europe, has also contributed to this. Nikolić also believes that the weakening of the euro is a trend that has been going on for a long time and that it will probably continue due to the war in Ukraine and the monetary policy of the European Central Bank (ECB).
Although this is bad news for Europe and has had a negative influence, mainly in the shape of inflation and increased pressure on prices, ‘it will not affect Serbia too much’, Nikolić adds as the dollar is not such a prevalent currency in Serbia’s external trade and Serbia uses dollars only to pay for energy products. Also, Serbia’s public debt is only 10 per cent in dollars.
“This rupture that is present in the international foreign exchange market does not affect us directly, as it mainly affects the Eurozone. The weakening of the euro is worrying for Europe, but still, Europe insistently refuses to adjust its monetary policy to the policy of the American Central Bank (Fed),” Nikolić concludes.
(Danas, 13.07.2022)