Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Euro falls below parity with the dollar

reuters.com

Post reply on HN
Print view View original

51–60 of 286 posts

Re: Euro falls below parity with the dollar

#51

Post by JumpCrisscross »

adammarples wrote: post #47
legulere wrote: post #36

Earlier quoted context omitted.

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.

> the Russian state is burning through its foreign reserves to backstop it

Half of Russia’s reserves are sanctioned. They’re earning bumper returns on their energy exports, mainly oil, despite the ~20% discount they’re forced to offer. And they’ve been seizing exporters’ hard currency.

They say they’re down 10% (20% sanctions adjusted) from February [1]. That’s a decrease, but it’s not burning. (Obvious disclaimer: they’re probably lying.)

[1] https://tradingeconomics.com/russia/foreign-exchange-reserve...

Re: Euro falls below parity with the dollar

#52

Post by cloutchaser »

ladyanita22 wrote: post #43
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

Its both really.

In Europe you can’t do innovation, or it’s an order of magnitude more expensive.

Re: Euro falls below parity with the dollar

#53

Post by [deleted] »

thiago_fm wrote: post #45

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 peo…

[deleted]

Re: Euro falls below parity with the dollar

#55

Post by waffleiron »

devoutsalsa wrote: post #32
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 isn't strong. You can't sell meaningfully sell it on the open market. When you buy it, the price goes up. When you can't sell it, the price stays up. https://www.cbsnews.com/news/russia-ukraine-ruble-currency-r...

> When you buy it, the price goes up. When you can't sell it, the price stays up.

How could you buy it, if it can't be sold? Also that article is from June, a lot has changed since then.

Re: Euro falls below parity with the dollar

#56

Post by [deleted] »

adammarples wrote: post #47
legulere wrote: post #36

Earlier quoted context omitted.

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.

[deleted]

Re: Euro falls below parity with the dollar

#57

Post by sph »

nothis wrote: post #24
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?

>For people in the EU/UK, how has this currency slide impacted your day to day? Not at all? I mean, I guess you could argue which caused which but the real problem here in central Europe are gas and energy prices. Those legitimately doubled and affect personal budgets.

Would you be prepared to say that the 18% inflation [1] isn't completely due to GBP getting weaker than USD? Not being facetious, actually asking the question.

Because I'm sure all the US-based services will soon be updating their prices to match our rapidly weakening currency.

1: https://www.theguardian.com/business/live/2022/aug/22/cinewo...

Re: Euro falls below parity with the dollar

#58

Post by FranzFerdiNaN »

cloutchaser wrote: post #52
ladyanita22 wrote: post #43

Earlier quoted context omitted.

I'd bet it has much more to go with the US shale oil industry. In Europe you can't do fracking

Its both really. In Europe you can’t do innovation, or it’s an order of magnitude more expensive.

You mean you cant do innovation without dumping the cost on society. Someone is paying for the price difference.

Re: Euro falls below parity with the dollar

#59

Post by yuan43 »

The headline is "Gas crisis sends euro back below parity against dollar."

Yet the article does not explain how a "gas crisis" leads to a weaker currency.

What does lead to a weaker currency? On the EU side, central bank accommodation in the face of inflation ripping higher. Germany recently logged a 37% YoY annual increase in producer prices:

https://www.reuters.com/world/europe/german-economic-outlook...

And the ECB has done basically nothing about it. Deeply negative real rates and little indication that the ECB has the stomach for any substantive action.

On the US side, there have been sizable interest rate hikes, which will continue at least until the midterm elections get underway. Real rates are still deeply negative.

That difference in rates attracts a lot of capital that might otherwise be parked on the EU side.

The US doesn't need to be a pillar of financial responsibility to attract the world's capital. It just has to be the cleanest dirty shirt in the hamper.

Re: Euro falls below parity with the dollar

#60

Post by epgui »

gls2ro wrote: post #31

I assume this should be good for EU economy on the long run? Like exports from EU to US are now more profitable. Or am I missing something? Can someone with more understanding/background explain how this might effect production and exports?

Yes, it is indeed good in that it makes European exports more competitive, but on the flip side, imports are more expensive, which can mean inflation and/or increased sensitivity to supply chain disturbances. I’m sure it causes some other problems as well.

(not my area of expertise)

Post reply on HN