Currency crisis: the euro falls to a 20-year low

Frankfurt am Main - The euro has fallen into the abyss and has been at a 20-year low since yesterday. The currency decline is affecting the German economy and is also fueling inflation. On Monday, the common currency fell to dollar parity, which had long been considered impossible. This was last the case in autumn 2002. This means that one euro currently only costs one dollar. Both currencies are currently worth the same. A year ago, in June 2021, the rate was 1 to 1.20.

This development is causing enormous damage to the German economy. Because the import of raw materials such as oil and gas becomes more expensive as a result. Because these are traded in dollars. Irrespective of the price increases that are already taking place, Europeans now have to pay 20 percent more for it, ie 13 months ago.

Because the euro has fallen accordingly since then. The import prices for so-called preliminary products are rising massively due to the currency decline and are accelerating the price increase. An example: In euros, Brent North Sea oil has almost reached a new record. In dollar terms, it's still a long way off.

The euro also falls against other currencies
It has long been the case that a weak currency fuels German exports. This has changed – not only since the German foreign trade balance is negative. For the first time in more than 30 years, Germany has to import more goods than it exports. World export champion – that was in the past.

The entire euro zone has fallen into negative territory. The deficit was already 37 billion euros in April, while a year ago the monthly surplus was 290 billion dollars. According to a forecast by Deutsche Bank, the euro zone foreign trade deficit could increase tenfold. The money house sees a gap of 400 billion dollars coming our way. This would have further devastating consequences and would cause the common currency to plummet further.

In addition, those who travel abroad now pay significantly more for their vacation. The euro is not only worth significantly less in the USA, but also in Switzerland and the Czech Republic, for example.

Source: Junge Freiheit