January 28, 2022

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20 years after the arrival of the euro, the currency that facilitated travel

20 years after the arrival of the euro, the currency that facilitated travel

January 1, 2002. euro It reaches the citizen’s pocket after a transitional process This made it an official and daily-use currency in different markets since the beginning of 1999. The single European currency – which was less of a barrier to travel – thus celebrates two decades as a currency of current use, although three years before the first banknotes and coins of the currency were distributed European among the population, it has already been used in financial transactions and has been listed on the market. The euro is the most visible evidence of European integration: about 341 million people use it every day, making it the second most used currency in the world. The European Commission recalls that “the euro abolished currency exchange, facilitating and reducing the cost of trips to the 19 countries of the eurozone.”

With the arrival of the euro, Ending the need to make changes from one currency to another when national banknotes and coins disappear. In this way, trips were simplified for the European tourist, a feature that gained particular value for Spain, the traditional receiving of tourists, given that Europe is its main source and two of its main destinations, France and Germany, belong to the eurozone.

The euro has been a common currency for two decades.

However, it must be remembered that the United Kingdom, now outside the European Union through Brexit, but never joined the single currency club, It has always been the main trigger until the arrival of COVID.

lights and shadows

Although the single currency has brought stability in these two decades He also had shadows, such as the noticeable price increases it brought with it when it entered trading or its inability to mitigate the financial crisis that brought it under control.

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In those early years of its price when it was not a common currency, its market value plummeted and marked by what is now its all-time low, $0.8230 per unit in October 2000, In a full burst of the first bubble of the decade, the “dotcom” bubble.

When it entered trading, just four months after the 9/11 attacks, it recovered and approached parity ($0.9033), a level from which it climbed in the following years to reach an all-time high on July 15, 2009, 2008 ($1,6038). Two months before the bankruptcy of Lehman Brothers,

In May 2003, it first crossed the price at which it first appeared on the market, $1.1667, and it continued to rise until 2005.

That year, it lost 12.5% โ€‹โ€‹of its value against the dollar, due to the interest rate differential between the eurozone and the United States, which is higher in the latter, despite the trend reversal after the rate hike adopted by the European Central Bank in December. The first in five years.

First Rescue Operations

In November 2011, Mario Draghi took over the reins of the European Central Bank. At that time, three euro countries had already been bailed out, namely Greece, Ireland and Portugal, and the European financial system was going through enormous difficulties that led to the rescue of Spain (in 2012) and forced the European Central Bank to take measures to make money flow from banks to businesses and homes.

Nearly four years between the pre-crisis highs and Draghi’s resounding message about his commitment to the future of the euro is marked by significant volatility in the price of the euro, which has moved between 1.5 and $1.

In 2014, the economic recovery in Europe lags behind the US, where there is already talk of a rate hike (the Fed will do so in December 2015, the first hike in seven years), which has sent the euro down 10.6% that year .

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On the contrary, the European Central Bank lowered it again in September 2014 and in the spring of 2015 began to adopt stimulus measures, at a time when the price of the euro had already fallen below $ 1.1, the lowest since 2003 and the level it reached will return in The first half of 2020, in the midst of the COVID-19 pandemic.

However, it would still lose a bit more against the dollar in 2016, when the European Central Bank left interest rates at 0%, where they currently remain. On December 20, the European currency closed at $1.0388, the low for this year, rising in the following months to touch $1.25 at the start of 2018.

The beginning of the pandemic

Last year the Fed raised interest rates four times, This affected the value of the European currency against the United States, a trend that continued until the sharp drop in interest in the United States at the beginning of the pandemic, when they remained practically at the same level in the two major economic regions.

In the middle of 2021 the European currency lost 1.2 dollars, The level at which the year ends, as the market is betting on increased interest in the US ahead of the eurozone in light of high levels of inflation, a move that investors have already taken for granted after recent meetings of the Federal Reserve and the European Central Bank. .