Euro and pound fall to record lows against the dollar
September 26, 2022 - The euro and pound have fallen to historic lows against the dollar as Europe feels the pain of the war in Ukraine and a new UK stimulus package triggers fears of a surge in borrowing.
The strength of the U.S. dollar has soared more than 17% in 2022 as the Federal Reserve holds to its commitment to curb soaring price inflation by raising interest rates.
As Europe struggles with the economic fallout from Russia’s invasion of Ukraine, the euro has fallen to a 20-year low against the dollar – it reached parity with the greenback in July and currently one euro is worth $0.97
The British pound is heading the same way, as it tumbles against the dollar following the decision to introduce a new stimulus package consisting of fresh spending and tax cuts. At the time of writing, one pound is worth $1.08.
If the euro and pound are worth less, the cost of importing goods from overseas goes up – including oil and gas needed to counteract Russia’s stranglehold on European energy supplies.
And while it might look good for American tourists, in reality many different investment vehicles such as pension funds and corporate earnings will be taking a hit from these currency shocks.