Euro 2023 started with great momentum. The common currency initially cost a good 98 cents, but has increased in value this week in particular. The euro is currently at 1.0015 francs.
To remind you: At the beginning of 2002, when the euro was introduced, it was still 1.48 francs, and in the following years it went up to 1.60 francs. And last September, it fell as much as 94 inches, partly due to recession concerns.
Hopes of weakening inflation give wind to euro
The euro is also currently gaining strength against the US dollar. After a good $1.05 shortly after the turn of the year, it is currently heading towards $1.08.
Recent economic prospects, which are no longer as gloomy as they used to be, and hopes of lowering inflation have given the euro a major boost over the past few days, according to traders. Finally, the danger of a deep and prolonged recession in the “old continent” is decreasing.
Higher interest rates should make the dollar more attractive
Investors are also hoping that the US Federal Reserve can get off the gas in the fight against inflation. Higher US interest rates often make the dollar more attractive. Other indicators as to whether and to what extent the Fed will raise interest rates at upcoming meetings will be provided by consumer price index data on Thursday.
Like the Fed or the European Central Bank (ECB), the Swiss National Bank (SNB) launched a return in interest rates last year. Most recently, in mid-December, the SNB raised the main interest rate one step further to 1.0 percent.
Strong Swiss franc helped soften import prices in Switzerland
In the summer, Swiss currency watchers heralded a return in interest rates at the ECB and acknowledged that the franc would appreciate significantly against the euro. Starting from the second quarter of 2022, the SNB even stopped buying foreign exchange, which has been common for years, and started selling foreign currency in order to weaken the Swiss franc.
The strong franc has recently helped Switzerland soften its high import prices. For example, this is one of the main reasons why inflation in this country lags far behind that in Europe. In November, while inflation was 3 percent in Switzerland, prices in the euro area increased by 10 percent. (SDA)
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
