Why is the euro higher than the dollar? Analysis of the financial situation: why the euro is more expensive than the dollar

When the exchange rate of foreign currencies is growing by leaps and bounds, then people who put their money in rubles are at a loss, but what to do? Change money en masse? But which currency is better to choose in this situation? After all, most likely, in the future you will have to pay for the mortgage, you will need to go on vacation, repay the debt to friends.

Experts who are well versed in the financial world, making money on foreign exchange operations, constantly monitor forecasts, analyze the market, considering options for profitable acquisitions. Thus, the question of buying dollars or euros is more relevant today than ever.

Selling and buying foreign currency

Choosing dollars or euros, each person strives to neutralize the risks associated with inflation of the national currency. Also, many are pursuing the opportunity to increase their capital. In this case, one cannot do without analyzing currency trends.

For several years, there was a stable rise in the price of the euro, while the dollar was gradually losing its positions. And if earlier financial experts put their bets on the American currency, today their opinion has changed dramatically. The Ukrainian crisis, military actions in this country, contributed to the fact that the value of the dollar began to decline. Therefore, the use of this investment tool should be avoided for now.

The decline in foreign currencies is primarily due to political factors, but experts believe that fluctuations in the market can be artificially caused. Also, analysts say that at the current time you need to try to avoid making rash purchases (unless this is necessary) of the dollar or euro, so as not to lose your own funds.

What to choose: euros or US dollars

If you decide to buy foreign currency, then no one will give you accurate forecasts at the present time. Therefore, a diversified investment method should be applied. It is quite simple and reliable.

You just acquire required types currencies for you at the rate: 50% by 50% or divide the ratio into three or more parts, if there is a place for several foreign currencies. This will help you not to sink in the event that one of the currencies loses its positions. This way you can reduce your risks.

Of course, this approach saved many, when the purchase of currency was carried out even before its appreciation. In the meantime, this is a kind of roulette in which you have to guess when it is better to buy dollars / euros - tomorrow or today. The situation changes rapidly every hour.

Keeping money in foreign currency: what to look for

Each purchase of foreign currency requires a balanced approach, so it is worth solving a number of questions for yourself:

Before setting aside money in dollars or euros, answer a number of questions for yourself:

1. What currency is more expensive / cheaper today. The analysis of the ratio of the euro to the dollar in the foreign exchange market will help you with this. As of January 2020, the ratio is 1.1204. If we take into account the historical parallels, then already a value of less than 1.1-1.2 indicates that the dollar is expensive (in relation to the currency of the European zone); when the value rises to 1.3 - the euro strengthens its position. As for the values ​​of the dollar and the euro, a constant decline or growth is unacceptable for them, it would be more correct to say that the rates fluctuate within the range of the indicated values. And when the US dollar is expensive, it is time to buy the euro, and vice versa.

The latest trends from Deutsche Bank have shown the world a forecast of a protracted decline in the euro against the dollar:
For the current 2020, the ratio will be at the level of 1.10;
By 2018 - 1.00;
For 2019 - 0.90.

2. What kind of currency is more common in your region of the Russian Federation. Let's say the euro is important for Kaliningrad, since the border with the European Union is very close. As for other regions of Russia, they are pegged to dollars.

3. For what calculations did you need the currency. This is an important question, since there is no point in purchasing another currency if settlements in another are planned in a month or two. For example, if you are planning to go to Asia, then buy US dollars, if to Europe - then euros.

Having found answers to all of the above questions, listening to forecasts, analyzing the change foreign exchange market per last years, you will quickly make the right decision.

The euro and the US dollar are the world's leading settlement and reserve currencies. Why is such a relatively young currency like the euro more expensive than the US dollar, which for many years has been serving as an international currency of account.

When it was first introduced new currency euro, its rate against the dollar was set as 1: 1. However, after some time, the demand for the euro on the currency exchanges has increased significantly compared to the dollar. This is due to the fact that most of the countries trading in the eurozone, including Russia, have begun to diversify their gold and foreign exchange reserves.

It turned out that already at the initial stage, the euro jumped very sharply against the dollar. Such a rapid leap in the development of the euro took place in 2002. Until December of this year, the European currency was valued somewhat cheaper than the American one.

Today the situation has not changed, and the European currency is valued more expensive than the American one.

The main reasons why the euro is more expensive than the dollar

1. First of all, these are gold and foreign exchange reserves European countries Eurozone, because the Eurozone ranks third in terms of gold and foreign exchange reserves, second only to China and Japan.
2. In addition to gold and foreign exchange reserves, a significant influence on the value of world currencies is exerted by the fact that the United States, as an issuing country, has a huge external debt, which European countries do not yet have. The tremendously growing growth of the US national debt (over $ 16 trillion) greatly weakens the American currency.

In such situations, the Fed resorts to the resumption of the policy of "quantitative easing" to maintain monetary stimulus, which leads to the next large-scale release of the American currency.

This, in turn, of course, will affect the rise in inflation and the rise in energy prices, especially oil, and will affect the commodity markets, providing leadership to gold and wheat.

In addition to the above reasons, the high value of the euro against the dollar today is explained by the fact that large investment funds In an effort to diversify resources, they invest in the European currency, actively and on a large scale purchasing it. So, they insure themselves against possible recessions in the American economy.

In order to find out the euro dollar exchange rates and compare which is more expensive, a visitor of our resource just needs to look at the chart below, which displays the EUR USD quotes, they are updated 24 hours a day every second and are relevant at every current moment.

The graph is generated in real time and displays the status currency pair the euro dollar and the dynamics of its change for any selected time period, so the user can independently observe the trends in the behavior of the EUR USD currency pair and draw conclusions that the relatively young euro currency stably holds positions more expensive than the dollar

The chart will show which is more expensive - the euro or the US dollar

The graph clearly displays the quotes of the euro against the dollar and will help answer the question which is more expensive than the euro or the US dollar... In 2002, when the new euro was introduced, its exchange rate against the dollar was 1: 1. Over time, most of the countries trading in the Eurozone began to diversify, that is, to distribute their gold and foreign exchange reserves to minimize risks, and the demand for the euro on currency exchanges has increased significantly compared to the dollar. Today the situation has not changed, and the European currency is valued more expensive than the American one.

Although this situation seems to be a long-term trend, however, any user can independently verify the price ratio of the euro and the US dollar, no matter what scenario of the behavior of the EUR / USD currency pair unfolds. The chart accurately displays all the ups and downs in the euro / dollar quotes, the price value of the euro at any time is accurately displayed on a vertical scale of value up to the fifth decimal place. In addition, the horizontal timeline is scaled using an interactive toolkit, which allows the user to select any time period for observing the dynamics of the Euro / US dollar exchange rate.

On this day in 1948, a new currency was introduced in the Federal Republic of Germany (Federal Republic of Germany) - the German mark. After the changeover to the euro in 2002, the mark ceased to be legal tender in Germany, but remained forever in history as a stable and “hard” currency. Inspired by today's event, we have prepared a selection of the most expensive currencies in the world. You will be surprised, but the first place in this ranking is not occupied by the US dollar or even Swiss frank.

10. Singapore dollar

1 SGD = 0.74 USD *

Singapore dollar. Photo: valutaworld.ru

After Singapore gained independence in 1965, its currency, the Singapore dollar, existed as a currency pegged first to the British pound and then to the US dollar. Nevertheless, after 20 years, the authorities released the Singapore dollar to float freely. Its value skyrocketed after Singapore became the intellectual and technological hub of the East. Thanks to the stable GDP growth of Singapore, the currency of this country is very strong today.

9. Brunei dollar

1 BND = 0.74 USD

Brunei dollar. Photo: val.ru

Brunei is a small country in Southeast Asia. Located between Malaysia and the South China Sea, it has a very high GDP indicator per capita. Despite a slight drop in value (the peak was reached five years ago at 1 BND = 0.83 USD), the Brunei dollar remains a fairly strong currency and is practically not subject to inflationary processes.

8. Australian dollar

1 AUD = 0.75 USD

Australian dollar. Photo: vestifinance.ru

The Australian dollar, like the Canadian dollar, belongs to freely convertible commodity currencies, since its exchange rate is highly dependent on the prices of commodity markets... The reason is that Australia is essentially an export country. It sells gold, iron ore, oil, gas, coal and various products on foreign markets. Agriculture... 2015 was not the best year for the sector natural resources in Australia, which is why the value of the Australian dollar fell. But it is still in the top 10 most expensive currencies in the world.

7. US dollar

U.S. dollars. Photo: manlymenstuff.com

The American dollar, known to everyone from a young age, stably retains its status as the main world currency. In 1973, after the conclusion of a deal between Saudi Arabia and the United States there was such a thing as "petrodollars". And in 1975, the Organization of the Petroleum Exporting Countries adopted the US dollar as the only cash to buy oil. This gave rise to a strong demand for dollars. There are many opinions that the next wave of the crisis in the coming years will shake financial system USA, in connection with which the dollar will also collapse. However, experts are confident that the likelihood of this is very small.

6. Swiss franc

1 CHF = 1.04 USD

Swiss frank. Photo: novilist.hr

The Swiss banking system is one of the oldest and largest in the world. This made the Swiss national currency, Swiss franc, a safe haven for international capital. The Swiss central bank introduced a tight peg for the franc to the euro after the country joined the monetary union. However, last year the franc was released to float, which literally over the next 10 minutes caused an unprecedented rise in the franc against all currencies of the world up to 20-30%.

5. Euro

1 EUR = 1.13 USD

The well-known eurozone currency, despite many different economic and political problems, remains one of the most expensive currencies on the planet. The euro is still more expensive than the US dollar.

4. British pound

1 GBP = 1.47 USD

British pound. Photo: aoweibang.com

The pound sterling, or British pound, became a strong currency during the colonial era. Since then, it has remained one of the main units of account for savings accounts. In mid-2006, the pound became the third most widely used reserve currency and has seen a surge in popularity in recent years.

3. Omani rial

1 OMR = 2.60 USD

Omani rial. Photo: business.vesti-ukr.com

Oman's economy is based on oil exports. Also, gas production, metallurgy and tourism are developing in the country. The average monthly salary in Oman is $ 4,100, GDP per capita in 2015 was $ 15,232. Oman has no unemployment and no homeless people. All things considered, it should come as no surprise that the country's currency, the Omani rial, is one of the top three most expensive currencies in the world.

2. Bahraini dinar

1 BHD = 2.65 USD

Bahraini dinar. Photo: mirkrasiv.ru

The resilience of the Bahraini dinar depends on the country's ties to Saudi Arabia and the oil market. But he has another trump card. Bahrain is home to an American naval base, which is critical to US influence in the region.

1. Kuwaiti dinar

1 KWD = 3.32 USD

Kuwaiti dinar. Photo: currencycenter.eu

So, the most expensive currency in the world is the Kuwaiti dinar. At the same time, this currency has been holding its leadership for more than a dozen years. The point is that Kuwait is enjoying the fruits of a thriving oil-based economy.

*exchange rate as of 06/21/2016

From the point of view of the simple and inexperienced in economic and financial intricacies logic, the higher the rate of any currency, the more monetary units in the currencies of other countries it costs, the better. The principle of elementary thinking “the more, the better” works. However, the more developed economies one or another economic system possesses, the more extensive external relations it has established, the more acute the problem of expensive currency arises. Both the European Union and its currency, the euro, have come face to face with this problem.

What does the euro exchange rate mean?

First of all, it should be noted that there is nothing criminal or knowingly losing in the high rate of the European currency itself. After all, the concept of "exchange rate" is a concrete expression of those abstract processes that show the strength, stability and importance of a particular economic system. The exchange rate in relation to other currencies is an indicator of which particular country (or a group of countries, as in the case of the European Union) has a higher economic potential, higher productivity in relation to other countries. So when the real rate of a currency in comparison with other currencies is really high, it is an indicator of its economic potential. In addition, the fact that the euro is more expensive monetary unit than the same dollar, brings the euro to the fore among the world's reserve currencies (that is, currencies that are used by many states for various kinds of economic transactions). If we accept the fact that money is a specific commodity (and this is the basics economic theory), it turns out that the European Union has a better quality product (euro) than, for example, the United States (dollar), which means that it is the European “product” that will be in greatest demand in the world. When a product is actively bought, it is very positive for the "seller".

What's wrong with the high euro exchange rate?

However, with the euro, this is exactly the case when the negative consequences for the EU economy from the high cost of its own currency are much more than positive. Key point here is the fact that it makes sense to talk about the benefits of a high currency rate when this rate is objective, really reflecting the ratio of currencies and representing them economic systems... According to various calculations, the real ratio of the euro to the dollar should be between 1.2 and 1.3 dollars per 1 euro. At present, the euro is overvalued - and this is where the problems begin. Too high value of the European currency means that the international market due to the specifics of exchange operations, European goods will have a higher real value than their competitors from the United States and especially from China, whose authorities in the first case do not prevent the weakening of their currency, and in the second, they directly restrain growth towards real value.

The high cost of the euro entails another problem - the outflow of capital to other economies, to economies with cheaper currencies. The most vivid example is the rapid growth in the number of production facilities of European companies in China. The calculation is simple - since it is cheaper to produce goods in China, you can get a competitive advantage in the market. This means that now the goods that were previously produced in Europe in local factories by local workers are being produced by China's huge labor army. European workers lose their jobs, the EU treasury is deprived of income in the form of taxes from goods produced and sold in the territory of the united Europe. And the high rate of the euro is largely to blame for this.

In addition, it turns out that it was the European Union, through its expensive currency from its own pocket, paid for the largest competing economies, the United States and China, for their gradual withdrawal from economic crisis... Cheaper American and Chinese currencies provided cheaper goods, and during the crisis, even those who could afford to buy more expensive goods earlier moved to a lower price segment. In the long term, this means a very high probability that when the consequences of the global crisis are overcome, Europe will come back to haunt the high current rate and against the background of competitors who got out of the financial storm with minimal losses, it will begin to lose ground. This could lead to a decrease in the real value of the euro and such a scenario would be the collapse of all European ambitions to make the euro the world's main reserve currency.

Alexander Babitsky