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Euro falls below parity with the dollar

reuters.com

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Re: Euro falls below parity with the dollar

#41

Post by madcaptenor »

cesarb wrote: post #35
viraptor wrote: post #12

Earlier quoted context omitted.

Well, this led me to learn something from my stupid comment. Originally the EUA ( https://en.wikipedia.org/wiki/European_Unit_of_Account - euro's grandparent) started at 1:1 with USD. (and quickly diverged) TIL EUA was exchanged 1:1 for ECU, then 1:1 for EUR, so that's a nice continuation.

> Originally the EUA ( https://en.wikipedia.org/wiki/European_Unit_of_Account - euro's grandparent) started at 1:1 with USD. > EUA was exchanged 1:1 for ECU, then 1:1 for EUR, so that's a nice continuation. Interesting, I didn't know that. We did something similar here in Brazil to get rid of the hyperinflation: the Real (which started at 1:1 with the USD) was preceded by the URV, an accounting measure which was used…

For those who want to hear more about this, Planet Money ran an episode called How Four Drinking Buddies Saved Brazil: https://www.npr.org/sections/money/2010/10/01/130267274/the-...

Re: Euro falls below parity with the dollar

#42

Post by dmurray »

randomdata wrote: post #18
viraptor wrote: post #2

The title of this makes me annoyed. What parity? They're both abstract made up units that happened to be even on a random scale for a while. This is financial numerology :-( (yes, I know there's more content and "this week's currency summary" sounds less fun and I should chill out)

> They're both abstract made up units that happened to be even on a random scale They are salable assets with a price that people are willing to pay to acquire them. It is no more abstract than a hypothetical report on how a house in New York City is now worth less than a house in Wichita. Numerology implies some kind of mystical force. This is simply observation of measured human behaviour.

Not really, because we have a sense of how big a house should be. With outliers, it's a building large enough to house a single household. Houses in a given area will be within one order of magnitude in their prices.

It's more like saying "a building in New York is now worth less than a business headquartered in Wichita".

Re: Euro falls below parity with the dollar

#43

Post by ladyanita22 »

mg wrote: post #33

Every article about the EUR/USD ratio talks about gas prices. But the current rise of the Dollar started 15 years ago. Over these 15 years, it has become more and more apparent, that software is eating the world. And the US keeps extending their lead in this area. I would not be surprised if that contributes to a long term trend in the EUR/USD ratio. (I'm sitting in a cafe in Germany, writing this text on laptop made…

I'd bet it has much more to go with the US shale oil industry.

In Europe you can't do fracking

Re: Euro falls below parity with the dollar

#45

Post by thiago_fm »

This is great for German exports. Expect to see more Mercedes Benz in the streets of America.

It generates some inflation as imports are pegged to the dollar(somebody mentioned that it is hedged, it is just by some extent), but overall is actually good for the economic block. The EU needs to export to survive.

The EU has been fighting a possible deflation for most of the 2010s, this is actually not so negative as people might think.

If ECB would raise interest to the same rate as the FED, Euro would become too strong. Inflation is already decreasing in Germany even with that 0% interest rate.

The main inflation concern is the gas prices for this winter and this isn't fixable with monetary policy. If we have no gas, no amount of money will be able to buy it.

Re: Euro falls below parity with the dollar

#46

Post by randomdata »

dmurray wrote: post #42
randomdata wrote: post #18

Earlier quoted context omitted.

> They're both abstract made up units that happened to be even on a random scale They are salable assets with a price that people are willing to pay to acquire them. It is no more abstract than a hypothetical report on how a house in New York City is now worth less than a house in Wichita. Numerology implies some kind of mystical force. This is simply observation of measured human behaviour.

Not really, because we have a sense of how big a house should be. With outliers, it's a building large enough to house a single household. Houses in a given area will be within one order of magnitude in their prices. It's more like saying "a building in New York is now worth less than a business headquartered in Wichita".

> It's more like saying "a building in New York is now worth less than a business headquartered in Wichita".

Sure. There's no difference. A salable asset is a salable asset is a salable asset. They are all freely traded amongst each other. You can trade that business in Wichita to acquire the building in New York (along with some extras to reach parity in the transaction), just as you can trade your USD to acquire EUR (with some extras to reach parity in the transaction). If two assets have value parity, the trade can take place without any extras.

Comparisons of similar assets (currencies in different countries, houses in different cities) tends to be more interesting for reporting, though. If you are vacationing in a different country you're probably not going to trade your house for the foreign currency. You're typically going to trade your own locale's currency. Likewise, if you're moving to another city, you're probably going to trade your house in your origin city for one in the destination city, not your collection of comic books.

You could trade your house for foreign currency needed while on vacation and your comic book collection for a house when you move to New York City, but it is not nearly as common as trading similar assets when moving about the world. The media needs to attract a wide audience, so common behaviour is significant. Unfortunately, the beloved Comic Book Collector's Homebuying Guide Weekly didn't find the readership necessary to remain in business.

Re: Euro falls below parity with the dollar

#47

Post by adammarples »

legulere wrote: post #36
debacle wrote: post #21

Just for fun, I took a look at GBP/USD and it looks like that is tanking as well. Meanwhile the ruble is stronger than it's been in 4 years. For people in the EU/UK, how has this currency slide impacted your day to day?

The ruble is so strong because russia cannot spend money anymore because of sanctions. I'm living in Germany, the biggest problem is the inflation caused by energy prices. It's still lower than in the US or the UK, but people are starting to struggle. Business is going well as Germany is mostly export-driven, but companies don't want to give out rises.

The rouble is strong because the Russian state is burning through its foreign reserves to backstop it.

Re: Euro falls below parity with the dollar

#49

Post by JumpCrisscross »

unpopularopp wrote: post #39

> German economy, among the most exposed to disruptions in Russian gas supply, is "likely" to suffer a recession over the winter if the energy crisis continues to deepen At this point I feel the EU is pretty much done and the war just showed how weak the EU leadership is along how individual member nations acting sometimes totally against each other (see France doubling down on nuclear while Germany does the opposite…

> I don't see any positive outcome for the Union no matter what happens in the war

If you put zero value on European unity, and the security and economic benefits that brings, of course you aren’t going to value the EU. If Texans didn’t care when New York was attacked, it would be reasonable to ask why the U.S. is a thing. For what it’s worth, France building nukes while Germany snubs them is analogous to e.g. Kentucky burning coal while California puts down solar.

Re: Euro falls below parity with the dollar

#50

Post by thiago_fm »

unpopularopp wrote: post #39

> German economy, among the most exposed to disruptions in Russian gas supply, is "likely" to suffer a recession over the winter if the energy crisis continues to deepen At this point I feel the EU is pretty much done and the war just showed how weak the EU leadership is along how individual member nations acting sometimes totally against each other (see France doubling down on nuclear while Germany does the opposite…

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