Exchange rate, One euro is now equal to one dollar
The euro fell to par with the US dollar on Tuesday for the first time in twenty years, which means that one dollar is worth one euro.
The euro is declining and the dollar is strengthening. Facing Europe in the midst of war in Ukraine, the US economy looks more robust to investors.
The first consequence of this parity: all dollar transactions will become more expensive in the eurozone. This is called imported inflation. The lower the value of the currency, the higher the import costs.
Since the beginning of the year, the oil bill has increased by 8% due to the decline in the euro. Just like imports of other dollar-denominated goods. An energy bill will burden the trade deficits of European countries.
Finally, it is still the purchasing power of households in the eurozone that has to suffer.
It contributes to making energy prices more expensive, such as the prices of some agricultural products such as wheat, for example. Hence we consider that it will contribute to a 0.5 point increase in inflation in 2022 and 2023, explains Henri Sternignac, an economist at the French Observatory of Economic Conditions.