Well, won't be needing
those anymore.
Photo Illustration by Sean Gallup/Getty Images
The euro crumbled below a
new benchmark in early trading Tuesday, falling below $1.08 for the first time
in 11 years, and just kept sliding all day. At 4:30 p.m. GMT (12:30 a.m.
ET) it dropped to as low as low as $1.0709, down 1.32 percent.
Less than a week ago, it
was above $1.10. And just 12 months ago, the euro reached an 18-month high
against the dollar, at nearly $1.40. It has plunged 22.5 percent since
then. Here's how it looks:
Investing.com/Business Insider
The rapid decline of the
euro is raising questions about whether and when the two currencies might reach
parity again, according to the FT. They have not been one
for one since 2002.
Here's the FT:
"It's a risk that the
market will move towards parity," says Jane Foley, senior FX strategist at
Rabobank. "It's something which may happen during the course of the
year."
As Divyang Shah, global
strategist at IFR Markets, puts it: "The trend remains your friend on this
one and we see a strong possibility for the unit to trade at parity this
year."
Oxford Economics and
Goldman Sachs had forecast that the euro would drop to parity against the
dollar by the end of 2016, though that could happen a lot sooner at the speed
at which the euro is weakening. Many forecasters started the year with a $1.15
forecast for the euro at the end of the 2015. Unless the euro strengthens
considerably from now on, that's not looking like a very good projection.
Google Finance/Business Insider
Generally, the European
Central Bank's new quantitative-easing program should tend to weaken the euro,
and the Federal Reserve's likely rate hikes should strengthen the US currency:
When investments made in dollars can get a better return through higher
interest rates, demand for dollars goes up, and so the currency strengthens
against others.
And as far as pretty much
anyone is concerned, in the next couple of years the ECB will keep monetary
policy loose, while the Fed will be looking to raise rates steadily. That makes
parity between the euro and dollar a real possibility.
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