Why is the dollar close to taking off the euro from the throne?

The price of the dollar in the world continues to rise, thanks to investors’ fear of economic recession and is very close to breaking more than 20 years of shortage against the euro, another currency that has historically outperformed the markets, by a margin that fluctuates between 20 and 25%.

The search for assets that allow people to protect their money from the eventual downturn of the global economy is causing this currency to reach historic levels Which, for example, in the case of Colombia bypasses the difficult times of the epidemic.

At the close of trading for Friday – July 8, the Colombian Stock Exchange reported that this coin remained at a final value of 4,420 pesos and 50 cents, with which it collected an increase of 215 pesos in terms of values. Thrown into the markets closed last Friday, July 1, when it was 4205 pesos and 05 cents.

In countries like Chile, The dollar was priced this week at 1000 Chilean pesos It closed today at 965 pesos, a new historical high in the midst of the global strengthening of the currency and before the depreciation of copper, the country’s main export.

The dollar and the euro – Photo: Getty Images

Now, regarding the bidding between the dollar and the euro, during the morning of Friday – July 8, the single European currency fell below $1.01 for the first time since the end of 2002, affected by the anxiety caused by the economy of the old continent.

In early trading today, the euro lost 0.49% to $1.0110, Having fallen to 1.0072 a little earlier, it is approaching parity. This is mainly due to problems with Russian exports, which drove gas prices to levels not seen since March and the invasion of Ukraine.

Likewise, the prospect of gas shortages in the Eurozone encourages operators to move away from this economy and avoid a blow to economic activity that this may represent, and the European Central Bank is currently reluctant to raise interest rates too quickly. Interest, despite inflation.

For experts like Juan David Ballén, Director of Analysis and Strategy at Casa de Bolsa SCB, these kinds of situations are a consequence of what is happening on the Old Continent, which It is no stranger to the inflation crisis caused by the war waged by the government of Vladimir Putinaround the country that is considered the agricultural storehouse of Europe.

“The weakness of the euro against the dollar is, first, due to the fact that its economy is slowing down faster than that of the United States due to the war in Ukraine, and on the other hand, the increase in federal interest rates favors the dollar, as the European Central Bank has had to keep interest rates low and stable, Palin said.

Meanwhile, stock market analyst Andres Moreno pointed out The search for safe haven assets affects the rise of the dollar against the euro, In response to the prevailing confidence among investors towards the economy of this country.

“In times of crisis, people are looking for a place to shelter and this is what we see in dollars, we must not forget that the United States has one of the strongest economies in the world, even if it is in a bad state. It raises the price,” Moreno explained.

While this news may frighten many, according to this analyst, It is a scenario that can be used for the future, recognizing that the economy is made up of cycles and that after a crisis, there are always periods of recovery.

“Usually the markets are used to seeing a very strong Euro and with the currency devaluation that it suffers, almost to the point of parity with the dollar, it gives a little bit of peace of mind and more opportunity to carry out operations in the Euro since it is relatively as in the dollar, relatively, after 20 years, We’re bringing back an economic cycle,” this expert concluded.

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