What is more expensive euro or dollar. Analysis of the financial situation: why the euro is more expensive than the dollar
Which is better, dollars or euros, what to store? To make a choice, answer 3 questions:
1. Is it expensive or cheap now is the dollar (euro). To do this, just look at the euro / dollar ratio on the currency exchange. Now it is 1.0783 (as of 03/23/2020 18:30 MSC). Given the historical values \u200b\u200bof the euro / dollar, we can assume that a value of less than 1.1-1.2 indicates an expensive dollar (relative to the euro); more than 1.3 - about the expensive euro. The dollar and the euro are hard currencies; their exchange rate relative to each other does not grow (fall) infinitely, as against the ruble, but fluctuates around the indicated values. Of course, if the euro is now expensive, it makes sense to pay attention to the dollar, and vice versa.
2. Which currency is more in use in your area. For example, Kaliningrad is more fond of the euro, next to the EU border. In other regions, the dollar is more in use.
3. In what currency do you plan to pay. It is always more convenient to have the currency in which you plan to settle. Are you planning on vacation to Europe, save up euros; to Asia - dollars. It is foolish to buy a currency, so that later with losses it will be changed to another.
Answering these 3 questions, you will understand what currency to buy. If the answer to one question is one currency, the other - another, evaluate which question is what is most important to you. And buy it. Or wait. Buy now or wait? See the answer to this question.
On this day in 1948, a new currency, the German mark, was introduced in Germany (Federal Republic of Germany). After switching to the euro in 2002, the brand ceased to be legal tender in Germany, but forever remained 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 the US dollar and not even the Swiss franc.
10. Singapore dollar
1 SGD \u003d 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, then to the US dollar. However, after 20 years, the authorities released the Singapore dollar into free float. Its value soared after Singapore became the intellectual and technological center of the East. Due to the stable growth of Singapore's GDP, the currency of this country is very strong today.
9. Brunei dollar
1 BND \u003d 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 per capita GDP. Despite a slight drop in value (the peak was reached five years ago at the level of 1 BND \u003d 0.83 USD), the Brunei dollar remains a fairly strong currency and is practically not subject to inflationary processes.
8. Australian dollar
1 AUD \u003d 0.75 USD
Australian dollar. Photo: vestifinance.ru
The Australian dollar, like the Canadian dollar, refers to freely convertible commodity currencies, since its exchange rate is highly dependent on prices in commodity markets. The reason is that Australia is essentially an export country. It sells gold, iron ore, oil, gas, coal and various agricultural products on foreign markets. The year 2015 was not the most successful for the natural resources sector in Australia, which is why the value of the Australian dollar fell. But it is still among the top 10 most expensive currencies in the world.
7. US dollar
U.S. dollars. Photo: manlymenstuff.com
The American dollar, known from a young age, has steadily maintained its status as the main world currency. In 1973, after the conclusion of the transaction between Saudi Arabia and the United States, such a thing as “petrodollars” appeared. And in 1975, the Organization of Petroleum Exporting Countries accepted the US dollar as the only cash to buy oil. This generated a strong demand for dollars. There are many opinions that the next wave of crisis in the coming years will shake the US financial system, and therefore the dollar will collapse. However, experts are confident that the likelihood of this is very small.
6. Swiss franc
1 CHF \u003d 1.04 USD
Swiss frank. Photo: novilist.hr
The banking system of Switzerland is one of the oldest and largest in the world. This made the Swiss national currency, the Swiss franc, a safe haven for international capital. The Swiss Central Bank introduced a tight pegging of the franc to the euro after the country's accession to the monetary union. However, last year the franc was released into free float, which literally over the next 10 minutes caused an unprecedented growth of the franc to all currencies of the world up to 20-30%.
5. Euro
1 EUR \u003d 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 \u003d 1.47 USD
British pound Photo: aoweibang.com
Pound sterling, or British pound, became a strong currency during the colonial era. Since then, it remains one of the main units of account for savings accounts. In mid-2006, the pound became the third most widespread reserve currency, gaining a surge in popularity in recent years.
3. Omani rial
1 OMR \u003d 2.60 USD
Omani rial. Photo: business.vesti-ukr.com
Oman's economy is based on oil exports. The country also develops gas production, metallurgy and tourism. The average monthly salary in Oman is $ 4,100, GDP per capita in 2015 amounted to $ 15,232. There are no unemployment and no homeless people in Oman. Given all the facts, it is not surprising that the country's currency, the Omani rial, is one of the three most expensive currencies in the world.
2. Bahraini dinar
1 BHD \u003d 2.65 USD
Bahraini dinar. Photo: mirkrasiv.ru
The durability of the Bahraini dinar depends on the country's ties with Saudi Arabia and the oil market. But he has one more trump card. An American naval base is located in Bahrain, which is crucial for US influence in the region.
1. Kuwaiti dinar
1 KWD \u003d 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 held its leadership for more than a dozen years. The fact is that Kuwait enjoys the fruits of a booming oil trading economy.
*exchange rate as of 06/21/2016
The euro and the US dollar are the world's leading 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 served as an international monetary unit.
When the new euro was introduced, its rate against the dollar was set at 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 countries trading in the eurozone, including Russia, have begun to diversify their foreign exchange reserves.
It turned out that already at the initial stage, the euro against the dollar jumped very sharply. Such a rapid leap in the development of the euro occurred in 2002. Until December of this year, the European currency was priced slightly cheaper than the American
To date, the situation has not changed, and the European currency is valued more expensive than the American.
The main reasons why the euro is more expensive than the dollar
- First of all, these are the gold and foreign exchange reserves of the European countries of the Eurozone, because the Eurozone occupies the 3rd place in terms of the volume of foreign exchange reserves, second only to China and Japan.
- In addition to gold and foreign exchange reserves, the United States, as the issuing country, has a significant impact on the value of world currencies in a huge foreign debt, which European countries do not yet have. The growing tremendous growth in US government debt (over $ 16 trillion) greatly weakens the US currency.
In such situations, the Fed resorts to a “quantitative easing” policy to maintain a monetary stimulus, which leads to another massive US currency issue.
This, in turn, of course, will affect inflation and rising energy prices, especially oil, and will affect commodity markets, providing leadership for gold and wheat.
In addition to these reasons, the high cost of the euro against the dollar today is explained by the fact that large investment funds, seeking to diversify their resources, invest in the European currency, actively and on a large scale purchasing it. So, they insure themselves against possible recessions in the American economy.
The euro and the US dollar are the world's leading leading settlement and reserve currencies. The question of which of these currencies is more stable arises among many citizens, and not just economists and financial analysts, because everyone is thinking about which currency is best to keep savings in, and save their capital in far from stable conditions of a constantly changing economy.
In addition, another question arises, why such a relatively young currency like the euro is more expensive than the US dollar, which for many years has served as an international monetary unit.
The stability and stability of currencies is determined by studying the dynamics of their exchange rate. Quotes of these currencies are very sensitive to many factors and changes in the world market, and also directly depend on the policy of the European Bank. There are many reasons why the euro is more expensive.
How did it all start?
For many years, the euro continues to remain more expensive than the dollar, but this was not always the case.
When the new euro was introduced, its rate against the dollar was set at 1: 1. However, over time, demand for the euro on the currency exchanges has increased significantly compared to the dollar. This is due to the fact that most countries trading in the eurozone, including Russia, have begun to diversify their foreign exchange reserves.
Thus, a partial replacement of stocks of dollars by the euro has led to an increase in the amount of US currency relative to the euro. The excess of the first and the lack of the second contributed to the growth of the value of the European currency.
It turned out that already at the initial stage, the euro against the dollar jumped very sharply. Such a rapid leap in the development of the euro occurred in 2002. Until December of this year, the European currency was valued somewhat cheaper than the American one. It was in 2002 that the euro became and continues to cost more.
Why is the euro today more expensive than the dollar?
To date, the situation has not changed, and the European currency is valued more expensive than the American. There are several reasons for this. First of all, these are the gold and foreign exchange reserves of the European countries of the Eurozone.
Since January 2014, when Latvia joined the European Union and there were 18 countries in the eurozone, the total international reserves of the national central banks of the eurozone countries and the ECB (Eurosystems) grew from € 542.372 billion, which were at the end of 2013, to € 571.019 billion. So, the Eurozone takes the 3rd place in terms of gold and foreign exchange reserves, second only to China and Japan.
Despite the fact that the United States remains the leader in terms of assets in gold (8,133.5 tons), the aggregate volumes of assets in gold, even some of the European countries that occupy the top positions in this indicator, are larger (Germany, 2nd place - 3390, 6 tons; Italy 3rd - 2451.8 tons; France 4th - 2435.4 tons; Netherlands 9th - 612.5 tons). All this provides and logically explains the high exchange rate of the euro against the dollar. However, this is not the only reason.
In addition to gold and foreign exchange reserves, the United States, as the issuing country, has a significant impact on the value of world currencies in a huge foreign debt, which European countries do not yet have. The growing tremendous growth in US government debt (over $ 16 trillion) greatly weakens the US currency.
In such situations, the Fed resorts to a “quantitative easing” policy to maintain a monetary stimulus, which leads to another massive US currency issue. This, in turn, of course, will affect inflation and rising energy prices, especially oil, and will affect commodity markets, providing leadership for gold and wheat.
In addition to these reasons, the high cost of the euro against the dollar today is explained by the fact that large investment funds, seeking to diversify their resources, invest in the European currency, actively and on a large scale purchasing it. So, they insure themselves against possible recessions in the American economy.
Compared with US problems, the difficulties of the EU countries are not so significant, therefore the currency is less risky, political and economic risks are not so high. The United States too actively prints new bills, providing them with the world market, thus only depreciating the dollar more strongly.
What awaits in the future a couple of euro-dollar?
For the euro-dollar pair, analysts put forward two possible developmental courses that rely on “unifying” and “historical” theories. The first implies that a single economic system, which will be formed in the near future, will use only one currency globally, presumably the euro, which claims to play this role.
The second, based on the experience of the past, suggests that the current currencies will be replaced by another. After all, history has repeatedly shown that the influence of many economic, geopolitical and social factors limits the dominance of individual currencies in the world market. The changes taking place in the world economy today are unlikely to drastically change the situation in the financial sector.
Most likely in the next few decades, the euro and the dollar will remain the main settlement and reserve world currencies. The American currency, being highly liquid, will not lose its status as a world reserve currency. As for the prospects for the euro, they are ambiguous and rather controversial.
Much depends on how soon the problems of some EU countries are resolved. After all, their instability negatively affects the general economic climate of the eurozone. However, this does not mean at all that the European currency will greatly weaken and fall in price. It has good prospects for growth and strengthening, but only with proper financial and political management.