Dollar to reach parity with Euro|Mark Hodson Photos|CC BY 2.0
Following a steady decline for almost a year, the US Dollar and Euro may reach parity this year for the first time in 20 years.
Friday, the Euro value was hovering around $1.05 against the dollar, down from around $1.22 in June 2021.
The Euro value always soared above the dollar—the highest value equalling $1.58 in March 2008.
Why the parity?
The steady narrowing of the two currencies is due to the surging inflation and the difference in monetary policies of the central banks. The Russia-Ukraine war has also lent its hand in the form of the energy crisis in Europe. STagflation is another reason why the Euro prices have dropped.
To address the situation, the European Central Bank may increase interest rates, though not as threatening as the Fed hikes.
