What is more expensive euro or dollar. Analysis of the financial situation: why the euro is more expensive than the dollar
What is better, dollars or euros, what to store in? To make a choice, answer 3 questions:
1. Expensive or cheap dollar (euro) now. 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 of the euro / dollar, we can assume that a value less than 1.1-1.2 indicates an expensive dollar (relative to the euro); more than 1.3 - about an expensive euro. The dollar and the euro are hard currencies, their exchange rate relative to each other does not grow (fall) indefinitely, as to the ruble, but fluctuates around the indicated values. Of course, if the euro is expensive now, it makes sense to pay attention to the dollar, and vice versa.
2. Which currency is more in use in your area. For example, in Kaliningrad they like the euro more, the EU border is nearby. In other regions, the dollar is more in use.
3. What currency are you planning to pay in? It is always more convenient to have the currency in which you plan to make payments. Are you going on vacation to Europe, save euros; to Asia - dollars. It is foolish to buy a currency in order to exchange it for another with losses later.
By answering these 3 questions, you will understand which currency to buy. If the answer to one question is one currency, to another - another, evaluate which question is more important to you. And buy. Or wait. Buy now or wait? See the answer to this question.
On this day in 1948, the FRG (Federal Republic of Germany) introduced new currency- German mark. After the adoption of the euro in 2002, the mark 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 or even the Swiss franc.
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, first pegged to the British pound, then to the US dollar. However, after 20 years, the authorities let the Singapore dollar float freely. Its value skyrocketed after Singapore became the intellectual and technological center of the East. Thanks to the stable growth of Singapore's GDP, 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 per capita. Despite a slight fall in value (the peak was reached five years ago at the level of 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, is a freely convertible commodity currency, since its exchange rate is highly dependent on commodity prices. 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 most successful year for the sector natural resources in Australia, which caused the value of the Australian dollar to fall. 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, has consistently maintained its status as the world's main currency. In 1973, after the conclusion of a deal between Saudi Arabia and the United States, such a thing as "petrodollars" appeared. And in 1975, the Organization of the Petroleum Exporting Countries adopted the US dollar as the only cash to buy oil. This created a strong demand for dollars. There are many opinions that the next wave of the crisis in the coming years will shake financial system United States, in connection with which the dollar will collapse. However, experts believe 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, safe haven for international capital. The Swiss Central Bank introduced a hard peg of the franc to the euro after the country's entry into the monetary union. However, last year the franc was allowed to float freely, which literally within the next 10 minutes caused an unprecedented growth of 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: www.aoweibang.com
The pound sterling, or British pound, has been a strong currency since 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 held reserve currency, having enjoyed a resurgence in popularity in recent years.
3. Omani rial
1 OMR = $2.60
Omani rial. Photo: business.vesti-ukr.com
Oman's economy is based on oil exports. Also, gas production, the metallurgical industry and the tourism business are developing in the country. The average monthly salary in Oman is $4,100, GDP per capita in 2015 was $15,232. There is 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 = 2.65 USD
Bahraini dinar. Photo: mirkrasiv.ru
The strength 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 crucial 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 fact is that Kuwait is enjoying the fruits of a booming economy based on the oil trade.
*exchange rate as of 06/21/2016
The euro and the US dollar are the world's main 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 settlement monetary unit.
When the new currency euro was introduced, its exchange rate against the dollar was set at 1:1. However, after some time, the demand for the euro on the currency exchanges 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 occurred in 2002. Until December of this year, the European currency was valued somewhat cheaper than the American one.
To date, the situation has not changed, and the European currency is valued more than the American one.
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 ranks third in terms of gold and foreign exchange reserves, second only to China and Japan.
- except gold and foreign exchange reserves considerable influence on the value of world currencies is exerted by the fact that the United States, as the issuing country, has a huge external debt which European countries do not yet have. Increasing at a tremendous pace, the growth of the US national debt (over $16 trillion) greatly weakens the US currency.
In such situations, the Fed resorts to the resumption of the policy of "quantitative easing" to maintain monetary stimulus, which leads to another large-scale issuance of the US currency.
This, in turn, will, of course, have an impact on rising inflation and rising prices for energy resources, especially oil, and will affect commodity markets, providing leadership to gold and wheat.
Apart from listed reasons, the high value of the euro against the dollar today is due to the fact that large investment funds, seeking to diversify resources, invest in the European currency, actively and on a large scale buying it. So, they insure themselves against possible recessions in the American economy.
The euro and the US dollar are the world's main settlement and reserve currencies. The question of which of these currencies is more stable arises among many citizens, and not only among economists and financial analysts, because everyone thinks about which currency is better to keep savings in, to preserve their capital in far from stable conditions of a constantly changing economy.
In addition, another question arises why such a relatively young currency as the euro is more expensive than the US dollar, which for many years has been performing the functions of an international settlement currency.
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 European Bank. There are many reasons why the euro is more expensive.
Where did it all begin?
For many years, the euro continues to be more expensive than the dollar, but this was not always the case.
When the new currency euro was introduced, its exchange rate against the dollar was set at 1:1. However, over 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.
Thus, the partial replacement of dollar reserves by the euro led to an increase in the amount of the American currency against 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 jumped very sharply against the dollar. 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 still more expensive than the dollar today?
To date, the situation has not changed, and the European currency is valued more than the American one. 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 also joined the European Union, and 18 countries became part of the eurozone, the total international reserves of the national central banks of the eurozone countries and the ECB (Eurosystem) have grown from €542.372 billion, which were at the end of 2013, to €571.019 billion. Thus, the Eurozone ranks third in terms of gold 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 total volume of assets in gold of even some of the European countries that occupy the top positions in this indicator is 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 value of world currencies is significantly affected by the fact that the United States, as the issuing country, has a huge external debt, which European countries do not yet have. Increasing at a tremendous pace, the growth of the US national debt (over $16 trillion) greatly weakens the US currency.
In such situations, the Fed resorts to the resumption of the policy of "quantitative easing" to maintain monetary stimulus, which leads to another large-scale issuance of the US currency. This, in turn, will, of course, affect the growth of inflation and the rise in energy prices, especially oil, and will affect commodity markets, providing leadership to gold and wheat.
In addition to the above reasons, the high cost of the euro against the dollar today is due to the fact that large investment funds, seeking to diversify resources, invest in the European currency, actively and massively buying it. So, they insure themselves against possible recessions in the American economy.
Compared to the problems of the United States, 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 US is too active in printing new banknotes, providing them to the world market, thus only depreciating the dollar more.
What lies ahead for the euro-dollar pair?
For the euro-dollar pair, analysts put forward two possible courses of development, which are based on "unifying" and "historical" theories. The first implies that one economic system, which will be formed soon, will use only one currency on a global scale, presumably the euro, which claims this role.
The second, based on the experience of the past, suggests that the current currencies will be replaced by another one. After all, history has shown more than once that the influence of many economic, geopolitical and social factors limits the time of domination of individual currencies in the world market. The current changes in the global economy are unlikely to radically 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. 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 contradictory.
Much depends on how soon the problems of some EU countries will be resolved. After all, their instability has a negative impact on the general economic climate of the eurozone. However, this does not mean at all that the European currency will weaken and become cheaper. It has good prospects for growth and strengthening, but only with the right financial and political management.